chapter 12

what is capitalism?

• economic system in which individuals are free to own the means of production and maximize profit

• basic resources that are used to make all goods and services

• law stating that when supplies of goods and services become plentiful

capital is all the human made resources used to_____

• produce goods and services

• rise prices in the market

• maximize profits

what type of system is capitalism?

• free enterprise

• monopoly

• law of suppy and demand

what does the federal government do?

• regulate economic activities with the goal of ensuring fairness in the market

• make laws

• total the amount of goods and services produced in the country

what does the government try to achieve its economic goals through....

• deflation

• fiscal policy

• GDP

an increase in government expenditures usually lead in to what?

• inflation

• greater economic activity

• tax decrease

monetary policy

• he purchase and sale of securities in the open market by a central bank

• comprises the Federal Reserve's actions and communications to promote maximum employment, stable prices, and moderate long-term interest rates

• the amount of funds that a bank holds in reserve to ensure that it is able to meet liabilities in case of sudden withdrawals

the reserve requirement is the amount of money that the FED requires banks to keep_____

• loaned

• in reserve

• borrowing

what is discount rate?

• amount of money the FED buys or sells government securites from and to the nation bank in order to alter the money supply

• charged for borrowed money

• the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility

social insurance taxes are ____

• property taxes

• regressive taxes

• sales taxes