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Flashcards in Str8 Fact Deck (44):
1

Over the last few decades, the US has spent what percent of time in recession?

10%

2

Since the 2008 recession, economic growth has been around....

2%

3

Most of the increase in the deficit from 2007 to 2013 is due to...

spending rising

4

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...

8 days

5

what percentage of the federal budget do we currently spend on interest on the debt?

5%

6

For the purpose of paying Social Security benefits, the relevant amount in the Social Security Trust Fund is..

$0

7

A president that significantly reduced income tax rates was

Kennedy and Reagan

8

the cigarette tax is...

regressive

9

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

10

The labor supply curve slopes......

Upward

11

unemployment rate

Unemployed / Civilian Labor Force

12

A high unemployment rate is consdiered

5.5%

13

Labor Force Participation Rate

Labor Force / Civilian Non-Institutional Population

*measures how many people are interested in holding a job.

14

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.

15

Frictional Unemployment

occurs because of the normal workings of the labor force, with people changing jobs and entering the labor force with new skills

16

Structural Unemployment

occurs due to changes in the labor force that render some skills obsolete

17

Cyclical Unemployment

What we usually think of as unemployment, occurs due to contractions during the business cycle.

18

Full employment exists when...

There is no cyclical unemployment

19

Say's Law

Supply creates it's own demand.

If you supply a good, you demand something of equal value in return.

20

Real Business Cycle Theory

Much of the business comes from real shocks to productivity

21

Recessionary Gap

The difference between Potential GDP and actual GDP in a recession

Keynes

22

Inflationary Gap

When actual GDP is higher than Potential GDP due to inflation

Keynes

23

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

24

Economic Stimulus act of 2008

Authorized sending "tax rebate" checks to taxpayers of $300-$1200

25

The Data Lag

the time it takes to realize there is a problem

26

The Legislative Lag

The time it takes for government to devise a solution to a problem

27

The Transmission Lag

The time it takes to complete a solution to a problem

28

The effectiveness lag

The time it takes for a completed solution to effect the economy fully

29

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

30

Supply Side Economics recommends changes in.....

Marginal Tax Rates- because they change as income, investment or other value-creating activities change

31

Lump Sum Tax Cut

a temporary tax cut that does not affect ones spending behavior

32

Broad Based Tax Cuts

affect wide ranges of economic activity

33

Targeted Tax Cuts

affect only narrow categories of economic activity and may not give incentive to create value

34

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

35

Net Public Debt

The percentage of debt that the government owes others, NOT ITSELF

36

Static Scoring

assumes that individuals will not change their spending behavior if taxation or spending changes

37

Dynamic Scoring

looks at the effects of past legislation to determine what the effects of new legislation will be

38

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

39

The end of social security was put off because of what two reasons

Baby Boom

Women entering the workforce

40

Hauser's Law

"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

41

Proportional Tax

tax rate is the same at all income levels

42

Progressive Tax

tax rate rises as income rises

43

Regressive Tax

Tax rate rises as income falls

44

Describe Milton Frieman's advise on Spending, Taxes or Deficits.

Because it is so inefficient for one person to spend another's income on a third party, it is better to lower spending than to lower deficits, so that increased production can eventually help pay off the deficit.