Government Flashcards
1
Q
Government (G) Includes:
A
Spending by federal, state, and local governments on goods and services. Transfer Payments are not included (SSI, unemployment insurance) and interest on debts.
2
Q
Government Spending is determined by:
A
Allocation Needs, Distribution Needs, Stabilization Needs
3
Q
Net Exports
A
Exports - Imports (X - M)
4
Q
Marginal Propensity to Import (MPM)
A
Level of imports is influenced by household income: (change in imports / change in Disposable Income)
5
Q
Define Tariff
A
A tax applied to an imported good. Raises the price of the good
6
Q
Define Quota (devaluation)
A
A limit on the amount of a good that can be imported. Raises the price of said good.
7
Q
Common Arguments Made in Favor of Restriction on Trade:
A
- Cheap Foreign Wages 2. Infant Industry 3. Terms of Trade 4. Anti-Dumping 5. National Defense
