Define each of the following terms as they relate to monetary and fiscal
Treasury Bills
short-term government securities issued at a discount from face value and returning the face amount at maturity
contractionary money policy
- Plans to decrease money supply - Tight Money: Less money is in circulation
Hyperinflation
A very rapid rise in the price level; an extremely high rate of inflation.
Liquidity
Availability of resources to meet short-term cash requirements.
Keynesian economics
Economic theory based on the principles of John Maynard Keynes stating that government spending should increase during business slumps and be curbed during booms.
Expansionary Money Policy
Expanding the money supply -->expanding the economy
fiscal policy
Government policy that attempts to manage the economy by controlling taxing and spending.
monetary policy
Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.
deficit spending
Government practice of spending more than it takes in from taxes
discount rate
Rate the Federal Reserve charges for loans to commercial banks
intrest rate
The percentage at which the money loaned is returned with added percentage multiplied by original cost
Stimulus
a coordinated effort to increase gov spending and lower taxes and interest rates to stimulate an econemy
Mortgage-backed security
a debt security created by pooling together a group of mortgage loans whose periodic payments belong to the holders of the security
Inflation
a general increase in prices and fall in the purchasing value of money.
Aggregate Demand
the amount of goods and services in the economy that will be purchased at all possible price levels
federal reserve
the central bank of the United States
reserve ratio
the fraction of deposits that banks hold as reserves
federal funds rate
the interest rate at which banks make overnight loans to one another
quantitative easing
when the Fed buys longer-term government bonds or other securities