Chap 15-16

Question 0

Entitlement Programs

Answer 0

A government program that guarantees certain benefits to a particular group or segment of the population.

Question 1

FICA. What is it? Who pays?

Answer 1

Taxes that fund social security and Medicare. Employees and Employers.

Question 2

Source of Tax Revenue:

Answer 2

Is the income that is gained by the governments through taxation. Income received by a government from taxes and non-tax sources.

Question 3

Proportion Tax:

Answer 3

A tax for which the percentage of income paid in taxes remains the same for all income levels.

Question 4

Progressive Tax:

Answer 4

A tax for which the percentage of income paid in taxes increases as income increases.

Question 5

Regressive Tax:

Answer 5

A tax for which the percentage of income paid in taxes decreases as income increases.

Question 6

Federal Budget:

Answer 6

The federal budget of a country is determined yearly, and forecasts the amount if money that will be spent on a variety of expenses in the upcoming year.

Question 7

Office of Management and Budget:

Answer 7

Government office that manages the federal budget.

Question 8

Tax exemptions:

Answer 8

to be free from, of not subject to, taxation by regulators or government entities.

Question 9

Fiscal Policy:

Answer 9

the use of government spending and revenue collection to influence the economy.

Question 10

Expansionary:

Answer 10

Increase gov. Spending. Cut taxes. Buts bonds back.

Question 11

Contraction:

Answer 11

Decrease gov. Spending. Cut taxes. Buy bonds back.

Question 12

Keynesian economics:

Answer 12

Form of demand-side economics that encourage government actions to increase or decrease demand and output.

Question 13

Supply-side economics:

Answer 13

A school of economics that believes tax cuts help an economy by raising supply.

Question 14

Treasury bill:

Answer 14

A government bond gab is repaid within three months to a year.

Question 15

Treasury note:

Answer 15

A government bond that is repaid within two to ten years.

Question 16

Treasury bond:

Answer 16

a government bond that can be issued for as long as 30 years.

Question 17

Auto-stabilizer:

Answer 17

A government program that changes automatically depending in GDP and a person’s income.

Question 18

Crowding-out-effect:

Answer 18

The kiss of funds for private investments due to government borrowing.

Question 19

Laffer curve:

Answer 19

A supposed relationship between economic activity and the rate of taxation that suggests the existence of an optimum tax rate that maximizes tax revenue.

Question 20

Federal Reserve System:

Answer 20

Often referred to as the Federal Reserve or simply “the Fed,” is the central bank of the United States. It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system.

Question 21

Monetary policy:

Answer 21

The actions the Federal Reserve takes to influence the level of real GDP and the rate of inflation in the economy.

Question 22

Cost of money:

Answer 22

Rate of interest or dividend payment on borrowed capital.

Question 23

Federal reserve system:

Answer 23

The nation’s central banking system.

Question 24

Federal reserve districts:

Answer 24

The twelve banking districts created by the Federal Reserve Act.

Question 25

Federal reserve board:

Answer 25

Banks were appointed by the president of the U.S.

Question 26

Short term loans:

Answer 26

they can lend money to FRB to prevent bank failures.

Question 27

Federal Reserve notes:

Answer 27

Allowed federal reserve to increase and decrease the amount of money in circulation according to business needs.

Question 28

Easy money:

Answer 28

A monetary policy that increases the money supply.

Question 29

Tight money:

Answer 29

A monetary policy that reduces the money supply. Money doesn't circulates in the economy. They increase interest rates in banks and sell bonds.

Question 30

Fed Open Market Committee:

Answer 30

Federal reserve committee that makes key decisions about interest rates and the growth of the United States money supply.

Question 31

Prime rate:

Answer 31

The lowest rate of interest at which money may be borrowed commercially.

Question 32

Reserve ratio:

Answer 32

The percentage of deposits which commercial banks are required to keep as cash according to the directions of the central bank.

Question 33

Check clearing system:

Answer 33

Movement of a check from the bank in which it was deposited to the bank on which it was drawn, and the movement if it's face amount in the opposite direction.

Question 34

4 characteristics of good tax.

Answer 34

Simplicity, efficiency, certainty, and Equity.

Question 35

Differ from Keynesian economics and supply side economics?

Answer 35

Keynesian: likes government to control what goes in Econ. | Supply side Econ: tax cuts will help Econ.