1. Economics Unit 4: Macroeconomics Vocabulary Review

2. Part 1 Anything that serves as a medium of exchange, a unit of account, and a store of value money

3. Coins and paper bills used as money currency

4. An institution for receiving, keeping, and lending money bank

5. The nation’s central banking system Federal Reserve System

6. The national currency we use today in the United States Federal Reserve Note

7. A bank charted, or licensed, by the national government National bank

8. Objects that have value in themselves and that are also used as money Commodity money

9. Objects that have value because the holder can exchange them for something else of value Representative money

10. Money that has value because the government has ordered that it is an acceptable means to pay debts Fiat money

11. money that a government has required to be accepted in settlement of debts; another word for fiat money Legal tender

12. Ch. 16 Part 1 Board of Governors Monetary policy Federal Reserve Districts Federal Advisory Council Federal Open Market Committee Discount rate Federal funds rate Required reserve ratio (RRR) Prime rate

13. 7 members that oversee the Federal Reserve System Board of Governors

14. Actions the Federal Reserve takes to influence the level of real GDP and the rate of inflation in the economy Monetary policy

15. The 12 banking districts created by the Federal Reserve Federal Reserve Districts

16. The research arm of the Federal Reserve Federal Advisory Council

17. Federal Reserve committee that makes key decisions about interest rates and the growth of the United States money supply Federal Open Market Committee

18. The rate the Federal Reserve charges for loans to commercial banks Discount rate

19. Interest rates banks charge each other for loans Federal funds rate

20. Ratio of reserves to deposits required of banks by the Federal Reserve Required reserve ratio

21. Rate of interest banks charge on short term loans to their best customers. Prime rate

22. Ch. 12 total value of all goods and services produced in a particular economy; also the dollar value of all final goods and services produced within a country’s borders in a given year Gross domestic product (GDP)

23. the amount of goods and services in the economy that will be purchased at all possible price levels Aggregate demand

24. a prolonged economic contraction recession

25. goods that last for a relatively long time such as refrigerators, cars, etc. Durable goods

26. a decline in real GDP combined with a rise in the price level stagflation

27. the study of behavior and decision-making of entire economies macroeconomics

28. the total amount of goods and services in the economy available at all possible price levels Aggregate supply

29. a period of macroeconomic expansion followed by a period of contraction Business cycle

30. a recession that is especially long and severe depression

31. goods that last a short period of time such as food, light bulbs, shoes, etc. Non-durable goods

32. Stead, long-term increase in a nation’s real GDP that tends to raise living standards Economic growth

33. Ch. 13 unemployment that occurs when workers’ skills do not match the jobs that are available Structural unemployment

34. unemployment that occurs when people take time to find a job Frictional unemployment

35. a price index determined by measuring the price of a standard group of goods meant to represent the typical “market basket” of a typical urban consumer Consumer Price Index (CPI)

36. the percentage rate of change in price level over time Inflation rate

37. the percentage of people who live in households with income below the official poverty line Poverty rate

38. unemployment that rises during economic downturns and falls when the economy improves Cyclical unemployment

39. a general increase in prices inflation

40. the percentage of the nation’s labor force that is unemployed Unemployment rate

41. inflation that is out of control or extremely high inflation hyperinflation

42. how the nation’s total income is distributed among its population Income distribution

43. Ch. 14 a tax for which the percentage of income paid in taxes increases as income increases Progressive tax

44. a tax for which the percentage of income paid in taxes decreases as income increases Regressive tax

45. income on which tax must be paid; total income minus exemptions and deductions Taxable income

46. taking tax payments out of an employee’s pay before he or she receives it withholding

47. spending about which government planners can make choices Discretionary spending

48. social welfare program that people are “entitled” to if they meet certain eligibility requirements entitlement

49. budget for major capital, or investment, expenditures Capital budget

50. budget in which revenues are equal to spending Balanced budget

51. tax for which the percentage of income paid in taxes remains the same for all income levels Proportional tax

52. spending on certain programs that is required by law Mandatory spending

53. budget for day-to-day expenses Operating budget

54. not subject to taxes Tax exempt

55. Ch. 15 the use of government spending and revenue collection to influence the economy; also a year’s period that can begin at any date. fiscal

56. government bond that is repaid within three months to a year. Treasury bill

57. government bond that is repaid within 2 to 10 years. Treasury note

58. government bond that can be issued for as long as 30 years Treasury bond

59. the idea that government spending and tax cuts help an economy by raising demand Demand-side economics

60. school of economics that believes tax cuts can help an economy by raising supply Supply-side economics

61. form of demand side economics the encourages government action in increase or decrease demand and output Keynesian Economics

62. when the government takes in more than it spends Budget surplus

63. when the government spends more than it takes in Budget deficit

64. government office that manages the federal budget Office of Management and Budget (OMB)

65. government agency that provides economic data to Congress Congressional Budget Office

66. bill that sets money aside for a specific purpose Appropriations bill

67. fiscal policies like higher spending and tax cuts that encourage economic growth Expansionary policies

68. fiscal policies like lower spending and higher taxes that reduce economic growth Contractionary policies

69. the idea that free markets can regulate themselves Classical economics