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| period of economic decline typically marked by lower GDP, a time when the FED may use loose monetary policy to get the economy going again. |
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| Interest,; 7% interest on a mortgage; important to know the real cost of items you buy with money from a loan |
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| consumer price index is a measure of the inflation rate based on the price of a "market basket" of typical household goods and services; compared over time. |
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| Interest the Fed charges banks for loans,; If it goes up the cost of money will likely go up; The rate is eventually passed on to other banks and consumers which can ease or tighten money |
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| statistics used largely to predict where the country is heading on the business cycle; exs=GDP, consumer confidence, durable goods orders, unemployment rate |
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| a gauge of how healthy the economy is; based on indicators such GDP, unemployment, stock market, and durable goods orders; helps businesses and gov't make decisions that will help the econ grow |
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| The central bank of the U.S.,; Headed by Benjamin Bernanke; controls the nations money supply monetary (MONEY-TARY) policy |
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| gross domestic product, the value of all FINAL goods and services produced in the country in a period of time; used to measure the health of the economy |
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| GDP divided by the population; takes population growth out of the picture in order to get an accurate picture of the growth of our economy |
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| Bonds, notes, and other debt instruments sold by the Fed; The Fed sells & uses as a money-tary tool; used to finance US gov't borrowings. |
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| largest drop in the business cycle in US history; 1930's, major unemployment, stock market crash, big increase in gov't role in the economy. |
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| a rise in the price of goods and services; typically about 3% per year; eats at the value of our money; determined by the CPI; fight it with tight money policy |
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| The supply of money in the market becomes greater; The Fed lowers the discount rate and reserve requirement, or there is economic growth, easier to get a loan , economy grows |
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| Banks that belong to the Federal Reserve system; most commericial banks; government backed banks |
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| actions carried out by the Federal Reserve in order to regulate the money supply, "money-tary policy", remember 3 tools the FED uses to tighten or loosen the money supply |
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| When the Fed sells U.S. bonds, or buys them back; Used to raise money for the governmnent to borrow; Selling bonds=tightening money supply, Buying bonds=easing money supply |
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| highest point in the business cycle, typically characterized by higher employment, higher consumer confidence, and stronger business growth. |
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| periods of economic expansion followed by contraction; peaks, contraction, trough, expansion; gov't may employ monetary and/or fiscal policies to smooth out the extermes |
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| GDP expressed in constant prices; takes inflation out of the picture in order to get a more accurate picture of the growth of our economy |
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| ordinarily defined as a prolonged decrease in economic growth as defined by negative growth in GDP, increased unemployment, and slow business growth over at least 6 months. |
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| Allows banks to loan a certain percentage of deposits; Currently banks keep 10% of all deposits; 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. |
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| The supply of money in the market is low; The Fed raises the discount rate and reserve requirement, or there is a credit crunch; makes it harder to get a loan and slows the economy |
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| How the supply of money is controlled; Discount rate, Reserve Requirement, and Selling U.S. Bond/Securities |
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| lowest point in the business cycle, typically charaterized by increased unemployment, lower consumer confidence, and slower business growth. |
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