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laissez-faire
A French term meaning "to allow to do, to leave alone." It holds that active governmental involvement in the economy is wrong.
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business cycles
Fluctuations between periods of economic growth and recession, or periods of boom and bust.
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interventionist state
Alternative to the laissez-faire state; the government took an active role in guiding and regulating the private economy.
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deregulation
A reduction in market controls (such as price fixing, subsidies, or controls on who can enter the field) in favor of market-based competition.
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gross domestic product (GDP)
The total market value of all goods and services produced in an area during a year.
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budget deficit
The economic condition that occurs when expenditures exceed revenues.
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inflation
A rise in the general price levels of an economy.
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Board of Governors
In the Federal Reserve System, a seven-member board that makes most economic decisions regarding interest rates and the supply of money.
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reserve requirements
Government requirements that a portion of member banks' deposits be retained as backing for their loans.
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discount rate
The rate of interest at which the Federal Reserve Board lends money to member banks.
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recession
A decline in the economy that occurs as investment sags, production falls off, and unemployment increases.
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