Study Guide - Economics Unit II

Front

Financial Institutions

Back

Banks, the stock market, and the Federal Reserve facilitate savings, investments, and money flow.

Front

Monetary Policy

Back

Involves managing the nation's money supply and interest rates, like a DJ controlling the economy's volume.

Front

Fiscal Policy

Back

Government's role through spending and taxes to influence the economy, either stimulating or contracting it.

Front

Price Stability

Back

Aims to keep prices stable, avoiding inflation or deflation through interest rate adjustments.

Front

Full Employment

Back

Goal to employ as many people as possible without causing inflation, often through lower interest rates.

Front

Economic Growth

Back

Supported by strategic interest rate management and government spending to foster a growing economy.

Front

Inflation Control

Back

The Fed may raise interest rates to cool off spending if prices skyrocket.

Front

Economic Volume Knob

Back

Metaphor for the Fed's role in adjusting the flow of money in the economy.

Front

Comparative Advantage

Back

Basis for international trade, allowing specialization and efficiency.

Front

Inflation vs. Deflation

Back

Price stability policies aim to avoid these economic conditions.