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MACROECONOMIC POLICY: Government policy aimed at the aggregate economy, usually to promote the macro goals of full employment, stability, and growth. Common macroeconomic policies are fiscal and monetary.

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BANK RUN: A situation in which a relatively large number of a bank's customers attempt to withdraw their deposits in a relatively short period of time, usually within a day or two. While common throughout the 1800s and early 1900s, government deposit insurance has largely eliminated banks runs in the modern economy. Historically a bank run was prompted by fears that the bank was on the verge of collapse, causing deposits to become worthless. Ironically a bank run often caused the bank to fail. Bank runs were often infectious, leading to economy-wide bank panics and business-cycle contractions.

     See also | bank panic | Federal Reserve System | Federal Deposit Insurance Corporation | required reserves | banking | banks | fractional-reserve banking | bank reserves | money | monetary economics | government functions | financial markets | liquidity | money creation | central bank | monetary policy | monetary aggregates | barter | full-reserve banking | no-reserve banking | goldsmith banking |


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FOREIGN TRADE POLICIES

Policies enacted by the government sector of a domestic economy to discourage imports from, and encourage exports to, the foreign sector. The three most common foreign trade policies are tariffs, import quotas, and export subsidies. Tariffs and import quotas are designed to discourage imports and export subsidies are designed to encourage exports. The general goal of these foreign trade policies is to create or increase a country's balance of trade surplus, that is, to increase net exports.

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