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Harmon's Govt. in Econ Vocab Flashcards
Vocabulary terms for Govt. in Econ unit
28
Economics
12th Grade
02/09/2012

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Term
a tax for which the percentage of income paid in taxes increases as income increases
Definition
Progressive tax
Term
a tax for which the percentage of income paid in taxes decreases as income increases
Definition
Regressive tax
Term
a tax for which the percentage of income paid in taxes remains the same for all income levels
Definition
Proportional tax
Term
states those who get the benefit from the govt. service should pay for it
Definition
Benefits-received principle
Term
states that people should pay taxes according to their ability to pay them
Definition
Ability-to-pay principle
Term
a prolonged economic contraction (lots of unemployment)
Definition
Recession
Term
a general rise in prices
Definition
Inflation
Term
the use of government spending and revenue collection to influence the economy
Definition
Fiscal policy
Term
the actions the Federal Reserve takes to influence the level of real GDP and the rate of inflation in the economy
Definition
Monetary policy
Term
an economic side effect of a good or service that generates benefits and costs to someone other than the person deciding how much to produce or consume
Definition
Externality
Term
money that has value because the government has ordered that it is an acceptable means to pay debts
Definition
Fiat money
Term
objects that have value in themselves as well as for use as money
Definition
Commodity money
Term
objects that have value because the holder can exchange them for something else of value
Definition
Representative money
Term
money's ability to withstand wear and tear
Definition
Durability
Term
money's ability to be easily carried and transferred to other people
Definition
Portability
Term
money's ability to be easily divided into smaller denominations
Definition
Divisibility
Term
a characteristic of money that implies that units of money are the same
Definition
Uniformity
Term
a characteristic of money that allows it to be accepted as a form of payment by everyone in the economy
Definition
Acceptability
Term
rate the Federal Reserve charges for loans to commercial banks
Definition
Discount rate
Term
rate of interest banks charge on short-term loans to their best customers
Definition
Prime rate
Term
interest rate banks charge each other for loans
Definition
Federal funds rate
Term
the buying and selling of government securities to alter the supply of money
Definition
Open-market operations
Term
monetary policy that reduces the money supply
Definition
Tight-money policy
Term
monetary policy that increases the money supply
Definition
Easy-money policy
Term
deposits that banks must keep on reserve and not loan out
Definition
Reserve requirement
Term
A price index determined by measuring the price of a standard group of goods meant to represent the typical “market basket” of a typical urban consumer
Definition
Consumer Price Index (CPI)
Term
A price index determined by measuring prices paid by producers for the coasts of production
Definition
Producer Price Index (PPI)
Term
the total value of all final goods and services produced in a particular economy
Definition
Gross Domestic Product (GDP)
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