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Exchanging goods and services for other goods and services without the use of money


The coins and paper bills used as money in an economy

Demand Deposit

The money in a checking deposit

Money Supply

The total amount of money available for use as a medium of exchange


An amount of money borrowed for a certain time period

Fractional Reserve Banking

A system of banking whereby banks keep a percentage of checking and saving deposits in reserve, leaving the rest available for loans and investments

Federal Reserve System

The central bank of the US, which provides services to banks, regulates their activities, and controls the nation's monetary policy

Board of Governors

Seven people appointed by President for a 14 year terms who are responsible for running the Federal Reserve System as a whole


A slowdown in economic activity and production

Full Employment

A situation in which any person who wants and is able to work should be able to find a job

Income Tax

A tax on what individuals and businesses earn. (Progressive)

Sales Tax

Charges on purchases of goods and services, usually a percentage of that price.

National Income Accounting

The tracking by the federal government of all the income and spending happening in the overall economy.

Economic Growth

An increase in the production of goods and services, which may provide citizens with a higher standard of living.


A decrease in the overall price level



Proportional Tax

A tax system whereby each taxpayer is required to pay the same proportion or percentage of their income as taxes

Regressive Tax

A tax that takes a higher percentage from the income of a person who has a low income than from a person who has a higher income

Progressive Tax

A tax system where by the percentage of a person's income that he or she pays in taxes increases with the more income he or she has

Direct Tax

A tax that directly affects the person against whom it is levied

Indirect Tax

A tax paid by someone other than the person against whom it is charged

Excise Tax

A charge on certain goods, such as alcoholic beverages, gasoline, and tobacco.


A certificate that people buy from the government which agrees to pay back the cost of the bond, plus interest, after a set period of time


State sponsored game in which player buy tickets hoping to win a cash prize

Budget Surplus

When government spends less than the tax revenues it receives.

Balanced Budget

When a government's spending equals the tax revenues it receives.

Budget Deficit

When a government spends more than the tax revenues it receives.

Entitlement Programs

Benefits paid by the government to people who are law entitled to them

Economic Freedom

The Freedom to own property, to make a profit, and to make choices about what to produce, buy, and sell


A group of companies organize to benefit from the high prices they all agree to charge


A single business with the power to control prices in a market.

Business Cycle

A repeated series of "ups" of growth and "downs" of recession.

Monetary Policy

Regulation of the money supply by the Federal Reserve

Fiscal Policy

A government's decisions about the amount of money it spends and the amount it collects in taxes


A general rise in the prices of goods and services throughout the economy

Gross Domestic Product

The total dollar value of all final goods and services produced and sold in the country in a year

Federal Budget

The government's plan for how it will raise and spend money


The amount by which government spending is greater than government income


The amount by which the government's income is greater than government spending

National Debt

The total amount of money the government owes to lenders

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