48 Monetary & Fiscal Policy

The ______ was created in 1913 to serve as America's central bank.

• Federal Reserve System

• Traditional Bank

• First Citizens Bank

Raising the reserve requirement reduces the amount of _____________ and lowering it pumps more money into the economy.

• money in circulation

• taxes on corporations

• sales tax

The Federal Reserve also sets the ______ banks charge to lend money to each other, which again controls the amount of money that circulates.

• interest rate

• loan exhange

• salary cap

The Fed buys and sells government debt in the form of treasury bills, or ______.

• government bonds

• international tariffs

• government foreclosure

______ is a general rise in prices that can be caused by a number of things, but one of them is the amount of money that circulates.

• inflation

• deflation

• foreclosure

__________ refers to the government's ability to raise taxes and spend the money it raises.

• Fiscal Policy

• Monetary Policy

• Social Policy

One uncontrollable that relates to monetary policy is interest payments on _______.

• federal debt

• credit cards

• income tax

The two big-ticket mandatory spending items. These are social security and Medicare, and they are paid for with dedicated __________

• federal taxes

• federal subsidies

_______________ provide income and health insurance for elderly people.

• Social Security and Medicare

• International Tariffs and Domestic Subsidies

• Income Taxes and Pension

By far the largest chunk of government spending goes into_______________.

• Social Security

• Defense

• Public Education

• Health Insurance