About This Chapter
The Economy and the U.S. Government - Chapter Summary
In this chapter, our video instructors explain U.S. government spending, taxes, and other aspects of fiscal policy. You'll be introduced to the Federal Reserve and open market operations. This chapter will also discuss examples of automatic stabilizers in economics.
You'll learn about expansionary monetary policy (policy designed to help the economy grow). As you progress through this chapter, you'll study how to slow the economy down, also know as a contractionary monetary policy. After you complete this chapter, you should be able to:
- Explain what the Federal Reserve system does
- Define open market operations
- Understand how the reserve ratio affects the money supply
- Give examples of fiscal policy tools
- Discuss expansionary and contractionary monetary policies
- Explain how fiscal and monetary policies are used to manage the economy
Our online video lessons on the economy and the U.S. government each include a video presentation designed by a professional educator. Each lesson also comes with a self-assessment quiz, so you get an idea of how well you've learned the material as you go. You'll also have access to a written transcript so you can review anything that may have seemed unclear when you watched the video. Clickable links to key words and phrases in the transcript link to text lessons with additional information for more in-depth study. Video lessons are long enough to cover the most important information and vocabulary about each subject, but short enough to keep you engaged.
1. What is the Federal Reserve System?
The Federal Reserve System is the central bank in the United States, and is often called ~'the banker's bank~' as well as the ~'lender of last resort.~' Learn about the Federal Reserve System and understand its functions, goals, and power regarding interest rates, the money supply, and other features of our economy.
2. Reserve Requirement, Open Market Operations and the Discount Rate
The Federal Reserve finances the federal government of the United States by purchasing U.S. government bonds. Discover how the Fed uses tools such as open market operations, the reserve requirement, and the discount rate to influence the nation's economy.
3. Open Market Operations & the Federal Reserve: Definition & Examples
The Federal Reserve's Open Market Committee (FOMC) oversees all operations in the open market. Learn about the open market and the actions that FOMC takes to control interest rates and the money supply.
4. How the Reserve Ratio Affects the Money Supply
The reserve ratio is one of many tools that the Federal Reserve System uses to influence the economy. Learn about the reserve ratio and understand how the Federal Reserve's requirements for the reserve ratio can affect the money supply and impact the economy.
5. Fiscal Policy: The Keynesian Revolution
Fiscal policy is when the government spends money to stabilize the economy. Learn how economists use gross domestic product to measure the economy, and explore the Keynesian revolution which started the fiscal policy and stabilization policy.
6. Fiscal Policy Tools: Government Spending and Taxes
Fiscal policy is the management of government spending and tax policies to influence the economy. Explore the tools within the fiscal policy toolkit, such as expansionary and contractionary fiscal policies.
7. Automatic Stabilizers in Economics: Definition & Examples
The concept of automatic stabilizers is important in economics and this involves fiscal policies and offsets in economic fluctuations. Learn more about automatic stabilizers and their benefits, and how the progressive tax code works.
8. Expansionary Monetary Policy: Helping the Economy Grow
Learn how expansionary monetary policy helps the economy grow. Topics covered include the definition of expansionary monetary policy, tools the Federal Reserve uses to conduct the policy, and the effects of low interest rates on consumers and businesses.
9. Contractionary Monetary Policy: Slowing the Economy Down
The contractionary monetary policy is used to purposely slow down the economy. Explore how the policy works and what tools are used by the central bank to contract the money supply to fight inflation.
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