Flashcards in Str8 Fact Deck (44):
Over the last few decades, the US has spent what percent of time in recession?
Since the 2008 recession, economic growth has been around....
Most of the increase in the deficit from 2007 to 2013 is due to...
at the end of 2012, a tax cut that wealthy americans had expired, the extra tax dollars that this cut would estimatedly bring in would fuel the government spending for...
what percentage of the federal budget do we currently spend on interest on the debt?
For the purpose of paying Social Security benefits, the relevant amount in the Social Security Trust Fund is..
A president that significantly reduced income tax rates was
Kennedy and Reagan
the cigarette tax is...
Value Marginal Product (VMP) is the ..........
demand for labor, because VMP is the marginal product of a worker multiplied by the price of the output.
It slopes downward because of the Law of Diminishing Returns
The labor supply curve slopes......
Unemployed / Civilian Labor Force
A high unemployment rate is consdiered
Labor Force Participation Rate
Labor Force / Civilian Non-Institutional Population
*measures how many people are interested in holding a job.
What is U6?
The unemployment rate including those who have stopped looking for jobs and those who are part time but would like to be full time.
occurs because of the normal workings of the labor force, with people changing jobs and entering the labor force with new skills
occurs due to changes in the labor force that render some skills obsolete
What we usually think of as unemployment, occurs due to contractions during the business cycle.
Full employment exists when...
There is no cyclical unemployment
Supply creates it's own demand.
If you supply a good, you demand something of equal value in return.
Real Business Cycle Theory
Much of the business comes from real shocks to productivity
The difference between Potential GDP and actual GDP in a recession
When actual GDP is higher than Potential GDP due to inflation
Keynes' Fiscal Policy
Government spending more than it taxes (running deficits) in order to combat a recessionary gap
Government taxing more than it spends in order to combat an inflationary gap
Economic Stimulus act of 2008
Authorized sending "tax rebate" checks to taxpayers of $300-$1200
The Data Lag
the time it takes to realize there is a problem
The Legislative Lag
The time it takes for government to devise a solution to a problem
The Transmission Lag
The time it takes to complete a solution to a problem
The effectiveness lag
The time it takes for a completed solution to effect the economy fully
Permanent Income Hypothesis
a change in someone's after tax income will affect their behavior if the change is PERMANENT, but not if it is temporary
Supply Side Economics recommends changes in.....
Marginal Tax Rates- because they change as income, investment or other value-creating activities change
Lump Sum Tax Cut
a temporary tax cut that does not affect ones spending behavior
Broad Based Tax Cuts
affect wide ranges of economic activity
Targeted Tax Cuts
affect only narrow categories of economic activity and may not give incentive to create value
Explain the idea behind the Laffer Curve
once taxes are increased so highly, people are going to be less willing to work, so they won't work, and the government cant tax their labor, so tax rates will decrease
Net Public Debt
The percentage of debt that the government owes others, NOT ITSELF
assumes that individuals will not change their spending behavior if taxation or spending changes
looks at the effects of past legislation to determine what the effects of new legislation will be
How does the US current spending break down?
60% Social Security, Medicare, Medicaid, Unemployment Insurance
20% National Defense
5% interest on the national debt
15% everything else
The end of social security was put off because of what two reasons
Women entering the workforce
"we cannot balance our spending problems with tax increases after a certain point"
No matter how high TAX RATES go, TAX REVENUE will always be around 17%-18%
if we are to close an income gap, it must be through spending cuts
tax rate is the same at all income levels
tax rate rises as income rises
Tax rate rises as income falls