Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economy > Test 8 > Flashcards

Test 8 Flashcards

1
Q

Roles of Government in our Economy

A
  1. To safeguard the market system
  2. To provide public goods and services
  3. Deal with externalities
  4. Assist those in need
  5. Stabilize the economy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

How does the government safeguard the market system?

A
  1. They establish and enforce the rules of the game
  2. They provide the public with information about market conditions and the state of the economy
  3. They help settle disputes
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are examples of public goods and services that the government provides?

A
  1. National defense
  2. Schools
  3. Roads
  4. Law and order
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

How does the government deal with externalities (pollution)?

A
  1. Persuasion
  2. Taxation
  3. Subsidies
  4. Regulation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How does the government assist those in need?

A

Transfer payments (entitlement programs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Transfer payments (entitlement programs)

A

Money paid directly to the individual for which no goods or services are produced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How does the government stabilize the economy?

A

They control the interest rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What three levels does the government conduct on?

A
  1. Local
  2. State
  3. National
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Types of Government Budget

A
  1. Balanced budget (spending same as gaining)
  2. Surplus (gaining more than spending)
  3. Deficit (spending more than gaining)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How does government spend money?

A
  1. Direct benefit payments to individuals
  2. National defense
  3. Net interest
  4. Grants to the states
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Grants-in-aids

A

Lots of conditions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Block Grants

A

Less conditions

State spends money where they see fit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Where does the federal government get its money?

A
  1. Personal income tax
  2. Taxes on corporations
  3. Excise tax
  4. Social insurance receipts
  5. Estate and gift taxes
  6. Customs duties (tariffs, tax on imported goods)
  7. Bonds
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Excise tax

A

Tax on manufacture and sale of certain items

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Where do states and local governments get their money?

A
  1. Sales tax
  2. Income tax
  3. Property tax
  4. Federal aid
  5. Lottery
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the state and local governments highest expense?

A

Education

16
Q

Why does the government collect taxes?

A
  1. To pay the cost of government
  2. To protect selective industry (protective tariff)
  3. To discourage activities that the government believes is harmful
  4. To encourage activities
  5. To regulate the level of economic activity
17
Q

Three most important questions regarding taxes

A
  1. Who should pay?
  2. What types of taxes should be collected?
  3. Who will actually pay the taxes?
18
Q

Benefits Received Principle

A

Belief that those who benefit from a government program, are the ones who should pay for that program

19
Q

Ability to Pay Principle

A

Belief that taxes should be paid by those who can most afford them

20
Q

Progressive Tax

A

Taxes a larger percentage of a higher income and a smaller percentage of a lower income

21
Q

Proportional Tax

A

Takes the same percentage of all income

22
Q

Regressive Tax

A

Takes a higher percentage from low income than from high income people
(Example: Sales tax)

23
Q

Tax Incidents

A

The individual or business that will bare the burden of a tax

24
Q

Tax Shifting

A

Passing the burden of paying a tax to someone else

25
Q

How can someone Tax Shift?

A
  1. Shifting Forward

2. Shifting Backwards

26
Q

Shifting Forward

A

The tax is passed down to the consumer

27
Q

Shifting Backwards

A

Suppliers or workers who produce a product are forced to assume the tax burden

28
Q

Justifications of a National Debt

A
  1. It’s not as large as it sounds
  2. Deficits can be used to stimulate the economy
  3. Government securities provide the public with investment opportunities
29
Q

Criticisms of the National Debt

A
  1. The annual interest payments are too high
  2. Deficits lead to inflation
  3. High deficits can lead to higher interest rates
  4. It hurts foreign investment
30
Q

Proposals to Reduce the Deficit

A
  1. Balanced Budget Amendment

2. Line Item Veto

31
Q

Balanced Budget Amendment

A

A constitutional amendment that requires the government to have a balanced budget

32
Q

Line Item Veto

A

Allows the president to strike out whatever laws he wants

Economy (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions