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Ch 14-16
Tax and Fed
37
Economics
12th Grade
05/06/2013

Additional Economics Flashcards

 


 

Cards

Term
Tax, Revenu, and Expenditure
Definition
Tax - mandatory payment to the gov
Revenue - income the gove recieves from taxes
Expenditure - Where tax money is spent
Term
2 Principles of Taxation
Definition
Benefits-Recieved Principle
Ability-to-pay Principle
Term
Proportional Taxes
Definition
Takes the same percentage from all incomes
Term
Progressive Taxes
Definition
Takes a larger percentage from a higher income
Term
Individual Income Tax
Definition
- Progressive
Largest source of revenue for fed. Gov.
Term
Corporate Income Tax
Definition
10% source of fed. gov. Revenue
Term
Sales Tax
Definition
tax on purchases
-Regressive
-Largest source for state gov.
Term
Property Tax
Definition
-Annual tax based on property value
-Largest source of revenue for local gov.
Term
FICA
Definition
- Funds S.S. and Medicare
- 2nd Largest source for Fed. Gov
Term
Estate Tax
Definition
- Placed on the assets of someone who has died (if over $5 Million)
Term
Gift Tax
Definition
Placed on the transfer of certain gifts
(large amounts of money only)
Term
Excise Tax
Definition
- Tax on the manufacture, sale, or consumption of a particular good or service
- Gas, cigarette, gambling, alcohol
Term
Customs Duty
Definition
- Taxes on goods brought into the U.S.
- Also Known as a tariff Tax
Term
Capital Gains Tax
Definition
- Tax on Capital gains
- % will vary with income
Term
Mandatory & Discretionary Spending
Definition
Mandatory
- Required by current law
- Largest is on Entitlements (welfare)
Discretionary
- Money that is left over
- Must by authorized each year
Term
Entitlement
Definition
Welfare
Term
Fiscal Policy and two tools
Definition
- When the federal government changes taxes and government spending to affect the economy.
- Expansionary & Contractionary Fiscal Policy's
Term
Expansionary Fiscal Policy
Definition
• When government wants to boost the economy (increase spending)
• Involves decreasing taxes for businesses & individuals
Term
Multiplier Effect
Definition
• Involves increasing government spending
Term
Contractionary Fiscal Policy
Definition
• When the government wants to slow down the economy (decrease spending)
• Involves decreasing government spending (multiplier effect)
• Involves increasing taxes for businesses & individuals
Term
Limitations of Fiscal Policy
Definition
• Policy Lags – By the time it’s put into place, it’s too far behind to do what its intended for.
• Timing Issues – At wrong time it’s not as effective
• Rational Expectations Theory – When the plan isn’t effective as it was supposed to be.
• Political Issues – when something should be said but it’s not because political popularity gets in the way
• Regional Issues – may not impact all areas the same
Term
Jean Baptiste Say
Definition
o Leading supporter is French economist
Term
Supply-Side Economics
Definition
 Lowers taxes on businesses & individuals (wealthy individuals)
 Decreases regulation
 Decreases gov’t spending
Term
John Maynard Keynes
Definition
Demand-Side Economics Put forward by John Keynes
Term
Demand-side economics
Definition
o Called “Keynesian economics”
 Increase gov’t spending
 Decrease individuals’ taxes (on lower income)
o Demand-Side favors government involvement
Term
Budget Deficit
Definition
When the Fed. Govn't Spend more than bring in
Term
Budget Surplus
Definition
When the Fed. Govn't spend less than they bring in
Term
National Debt
Definition
The total amount owed by the Federal Government
Term
Causes of the Deficit (4)
Definition
1. Over Spending
2. Not enough income
3. War
4. Disasters
Term
The Fed
Definition
Federal Reserve System: The central bank
Term
Organization of the Fed
Definition
into 12 districts
Term
Fractional Reserve banking & RRR
Definition
They order the banks on how much money to reserve
Term
Monetary Policy & Tools
Definition
When the Fed changes the Money Supply to influence the economy

Tools:
1. Buying and selling bonds
2. Reserve Requirement (RRR)
3. Interest Rates
Term
Easy Money Policy
Definition
To fight a contraction and boost the economy, increase spending...

1. Buy Bonds from banks
2. Decrease Reserve Requirement
3. Decrease Interest Rates
Term
Tight Money Policy
Definition
To slow the economy and decrease spending....

1. Sell bonds
2. Increase Reserve Requirments
3. Increase interest Rates
Term
Discount Rate
Definition
Decreased interest Rates
Term
Prime Rate
Definition
Increased Interest Rates
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