10 Points: (x2)
- https://quizlet.com/83208338/unit-6-vocabulary-flash-cards/
-Unit 6 Vocabulary
Chapter 14
Tax
A required payment to a local, state, or national government
Example: Tax on clothes
Revenue
income received by a government from taxes and nontax sources
Example: donating to a state park
Tax base
Income, property, good, or service that is subject to a tax
Example: yearly income
Individual income tax
A tax on a person's earnings
Example: paying taxes on an annual income of $100,000
Sales tax
A tax on the dollar value of a good or service being sold
Example: clothing tax
Property tax
A tax on the value of a property
Example: high taxes on a lakefront house
Corporate income tax
A tax on the value of a company's profits
Example: Apple pays taxes
Proportional tax
A tax for which the percentage of income paid in taxes remains the same for all income levels
Example: a flat tax
Progressive tax
A tax for which the percentage of income paid in taxes increases as income increases
Example: income tax
Regressive tax
A tax for which the percentage of income paid in taxes decreases as income increases
Example: sales tax
Incidence of a tax (tax burden) - Inelastic & elastic demand – who pays – seller or consumer?
The final burden of tax. The more inelastic the demand, the more easily the seller can shift tax to consumers.
Withholding
Taking tax payments out of an employee's pay before he or she receives it
Example: claiming 1 on your paycheck
Tax return
Form used to file income taxes
Example: 1400
Taxable income
Income on which tax must be paid; total income minus exemptions and deductions
Example: paying tax on your Houlihans hostessing income
Personal exemption
Set amount that you subtract from your gross income for yourself, your spouse, and any dependents
Example: spending money on food
Deductions
Variable amounts that you can subtract, or deduct, from your gross income
Example: interest on mortgage
FICA
Taxes that fund Social Security and Medicare
Social Security
Old-Age, Survivors, and Disability Insurance
Example: what you'll retire on
Medicare/Medicaid
A national health insurance program that helps pay for health care for people over age 65 or with certain disabilities
Example: an old man who has medicare
Estate tax
A tax on the estate, or total value of the money and property, of a person who has died
Example: tax on a house that my dead grandpa lived in
Gift tax
A tax on money or property that one living person gives to another
Example: Tax on the house that my grandma gave me
Import tax - Tariff
A tax on imported goods
Example: Tax on sugar from Costa Rica
Tax incentive
The use of taxation to encourage or discourage behavior
Example: High tax on cigarettes
Mandatory spending
Spending on certain programs that is mandated, or required, by existing law
Example: social security spending
Discretionary spending
Spending category in which government planners can make choices
Example: spending money on NASA
Entitlement spending
Social welfare program that people are "entitled to" if they meet certain eligibility requirements
Example: federal welfare
Federal aid to state governments
The money the Federal government lends to state governments
Example: DC loaning MN $2000
Operating budget
Budget on day-to-day expenses
Example: money that you spend every day
Capital budget
Budget for major capital, or investment, expenditures
Example: money that you invest
Balanced budget
Budget in which revenues are equal to spending
Example: if you spend $5 and make $5
Tax exempt
Not subject to taxes
Example: interest on municipal bonds
Real property
Physical property such as lands or buildings
Example: the land your house is on
Personal property
Possessions such as jewelry, furniture, or boats
Example: a couch
Tax assessor
An official who determines the value of a property
Example: A person who goes to your house and tells you how much it's worth
Chapter 15
Fiscal policy
the use of government spending and revenue collection to influence the economy
Example: the US fiscal policy taxes citizens to be able to pay for things the government funds
Federal budget
A plan for the federal government's spending and revenues for the coming year
Example: The plan Obama made
Fiscal year
A twelve month period that can begin on any date
Example: June 1, 2014-June 1, 2015
Office of Management & Budget (OMB)
Government office that manages the federal budget
Example: The OMB of the USA
Congressional Budget Office (CBO)
Government agency that provides economic data to Congress
Example: the government agency that gives data to Congress
Appropriations bill
A bill that sets money aside for specific spending
Example: Money aside for welfare
Expansionary policies
Fiscal policies, like higher spending and tax cuts, that encourage economic growth
Example: Tax cuts
Contractionary policies
Fiscal policies, like lower spending and higher taxes, that reduce economic growth
Example: higher taxes
Classical economics
The idea that free markets can regulate themselves
Example: The US
Productive capacity
The maximum output that an economy can produce without big increases in inflation
Example: The amount of money a country can make without inflation
Demand-side economics
The idea that government spending and tax cuts help an economy by rising demand
Example: expansionary policies
Supply-side economics
A school of economics that believes tax cuts can help an economy by raising supply
Example: tax cuts
Keynesian Economics
A form of demand-side economics that encourages government actions to increase or decrease demand or output
Example: if the US wanted to encourage government actions
Multiplier effect
The idea that every one dollar of government spending creates more than one dollar in economic activity
Example: spending a dollar on welfare will motivate people to do more economic things
Automatic stabilizer
A government program that changes automatically depending on GDP and a person's income
Example: taxes and transfer payments
Council of Economic Advisors
A group of three respected economics that advise the President on economic policy
Example: the people that advice Obama
Laffer Curve
Shows the relationship between the tax rate set by the government and the total tax revenue that the government collects
Example: a graph
Budget surplus
A situation in which the government takes in more than it spends
Example: more taxes going to the government than it spends
Budget deficit
A situation in which the government spends more than it takes in
Example: less taxes to the government than it spends
Hyperinflation
Very high inflation
Example: Russia and Germany after WWI
Treasury bills
A government bond that is repaid within three months to a year
Treasury notes
A government bond that is repaid within two to ten years
Treasury bonds
A government bond that can be issued for as long as 30 years
National debt
All the money the federal government owes to bondholders
Crowding out effect
The loss of funds for private investment due to government borrowing
Example: The government putting high taxes
Chapter 16
Monetary policy
The actions the Federal Reserve takes to influence the level of real GDP and the rate of inflation in the economy
Example: regulations on businesses
FOMC – Federal Open Market Committee
Federal Reserve committee that makes key decisions about interest rates and the growth of the United States money supply
Federal funds rate
interest rate banks charge each other for loans
Example: 5%
Discount rate
Rate the Federal Reserve charges for loans to commercial banks
Example: 6%
Money creation
The process by which money enters into circulation
Example: by making it and giving it to banks
Required Reserve Ratio
Ratio of reserves to deposits required of banks by the Federal Reserve
Example: 2:1
Money Multiplier Formula
Amount of new money that will be created with each demand deposit, calculated as 1 / RRR
Excess reserves
Reserves greater than the required amounts
Example: having more in savings than what was needed
Prime rate
Rate of interest banks charge on short-term loans to their best customers
Example: 10%
Open market operations
The buying and selling of government securities to alter the supply of money
Example: buying and selling government properties
Monetarism
The belief that the money supply is the most important factor in macroeconomic performance
Easy money policy
Monetary policy that increases the money supply
Example: lower interest rates
Tight money policy
Monetary policy that reduces the money supply
Example: if there's high inflation
Quantitative easing
A type of monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective
Inside lag
Delay in implementing monetary policy
Example: delaying the introduction of a bill
Outside lag
The time it takes for monetary policy to have an effect
Example: how long it takes after the bill is introduced for people to actually follow it
1 Point: (x5)
- If anyone is looking for a strong opinionated article about tax exemptions, check it out right here where the author speaks about small business tax exemption competition! http://articles.chicagotribune.com/1992-06-20/news/9202240541_1_tax-exemption-tax-burden-commercial-operations
- This article offers a great summary of monetary policy when speaking about the policy in China! Definitely worth the read! http://www.economist.com/blogs/freeexchange/2015/05/chinas-economy
- This article describes the tax assessment process in Maryland it tells about the taxable value of homes there. http://www.nolo.com/legal-encyclopedia/should-you-challenge-your-property-tax-assessment-maryland.html
- This article asks the question of whether or not the US is hyperinflation imminent. The article is a great read and is a little bit lengthy but gives a description of hyperinflation and how it has a relationship with the USA. http://www.forbes.com/sites/mikepatton/2014/04/28/is-u-s-hyperinflation-imminent/
- This article speaks about entitlement spending and how it is the highest it has ever been in history. It's a great read whether you know a lot about the issue or nothing at all, but it blames both parties. http://www.usnews.com/opinion/articles/2012/12/19/the-shocking-truth-on-entitlements
- https://quizlet.com/83208338/unit-6-vocabulary-flash-cards/
-Unit 6 Vocabulary
Chapter 14
Tax
A required payment to a local, state, or national government
Example: Tax on clothes
Revenue
income received by a government from taxes and nontax sources
Example: donating to a state park
Tax base
Income, property, good, or service that is subject to a tax
Example: yearly income
Individual income tax
A tax on a person's earnings
Example: paying taxes on an annual income of $100,000
Sales tax
A tax on the dollar value of a good or service being sold
Example: clothing tax
Property tax
A tax on the value of a property
Example: high taxes on a lakefront house
Corporate income tax
A tax on the value of a company's profits
Example: Apple pays taxes
Proportional tax
A tax for which the percentage of income paid in taxes remains the same for all income levels
Example: a flat tax
Progressive tax
A tax for which the percentage of income paid in taxes increases as income increases
Example: income tax
Regressive tax
A tax for which the percentage of income paid in taxes decreases as income increases
Example: sales tax
Incidence of a tax (tax burden) - Inelastic & elastic demand – who pays – seller or consumer?
The final burden of tax. The more inelastic the demand, the more easily the seller can shift tax to consumers.
Withholding
Taking tax payments out of an employee's pay before he or she receives it
Example: claiming 1 on your paycheck
Tax return
Form used to file income taxes
Example: 1400
Taxable income
Income on which tax must be paid; total income minus exemptions and deductions
Example: paying tax on your Houlihans hostessing income
Personal exemption
Set amount that you subtract from your gross income for yourself, your spouse, and any dependents
Example: spending money on food
Deductions
Variable amounts that you can subtract, or deduct, from your gross income
Example: interest on mortgage
FICA
Taxes that fund Social Security and Medicare
Social Security
Old-Age, Survivors, and Disability Insurance
Example: what you'll retire on
Medicare/Medicaid
A national health insurance program that helps pay for health care for people over age 65 or with certain disabilities
Example: an old man who has medicare
Estate tax
A tax on the estate, or total value of the money and property, of a person who has died
Example: tax on a house that my dead grandpa lived in
Gift tax
A tax on money or property that one living person gives to another
Example: Tax on the house that my grandma gave me
Import tax - Tariff
A tax on imported goods
Example: Tax on sugar from Costa Rica
Tax incentive
The use of taxation to encourage or discourage behavior
Example: High tax on cigarettes
Mandatory spending
Spending on certain programs that is mandated, or required, by existing law
Example: social security spending
Discretionary spending
Spending category in which government planners can make choices
Example: spending money on NASA
Entitlement spending
Social welfare program that people are "entitled to" if they meet certain eligibility requirements
Example: federal welfare
Federal aid to state governments
The money the Federal government lends to state governments
Example: DC loaning MN $2000
Operating budget
Budget on day-to-day expenses
Example: money that you spend every day
Capital budget
Budget for major capital, or investment, expenditures
Example: money that you invest
Balanced budget
Budget in which revenues are equal to spending
Example: if you spend $5 and make $5
Tax exempt
Not subject to taxes
Example: interest on municipal bonds
Real property
Physical property such as lands or buildings
Example: the land your house is on
Personal property
Possessions such as jewelry, furniture, or boats
Example: a couch
Tax assessor
An official who determines the value of a property
Example: A person who goes to your house and tells you how much it's worth
Chapter 15
Fiscal policy
the use of government spending and revenue collection to influence the economy
Example: the US fiscal policy taxes citizens to be able to pay for things the government funds
Federal budget
A plan for the federal government's spending and revenues for the coming year
Example: The plan Obama made
Fiscal year
A twelve month period that can begin on any date
Example: June 1, 2014-June 1, 2015
Office of Management & Budget (OMB)
Government office that manages the federal budget
Example: The OMB of the USA
Congressional Budget Office (CBO)
Government agency that provides economic data to Congress
Example: the government agency that gives data to Congress
Appropriations bill
A bill that sets money aside for specific spending
Example: Money aside for welfare
Expansionary policies
Fiscal policies, like higher spending and tax cuts, that encourage economic growth
Example: Tax cuts
Contractionary policies
Fiscal policies, like lower spending and higher taxes, that reduce economic growth
Example: higher taxes
Classical economics
The idea that free markets can regulate themselves
Example: The US
Productive capacity
The maximum output that an economy can produce without big increases in inflation
Example: The amount of money a country can make without inflation
Demand-side economics
The idea that government spending and tax cuts help an economy by rising demand
Example: expansionary policies
Supply-side economics
A school of economics that believes tax cuts can help an economy by raising supply
Example: tax cuts
Keynesian Economics
A form of demand-side economics that encourages government actions to increase or decrease demand or output
Example: if the US wanted to encourage government actions
Multiplier effect
The idea that every one dollar of government spending creates more than one dollar in economic activity
Example: spending a dollar on welfare will motivate people to do more economic things
Automatic stabilizer
A government program that changes automatically depending on GDP and a person's income
Example: taxes and transfer payments
Council of Economic Advisors
A group of three respected economics that advise the President on economic policy
Example: the people that advice Obama
Laffer Curve
Shows the relationship between the tax rate set by the government and the total tax revenue that the government collects
Example: a graph
Budget surplus
A situation in which the government takes in more than it spends
Example: more taxes going to the government than it spends
Budget deficit
A situation in which the government spends more than it takes in
Example: less taxes to the government than it spends
Hyperinflation
Very high inflation
Example: Russia and Germany after WWI
Treasury bills
A government bond that is repaid within three months to a year
Treasury notes
A government bond that is repaid within two to ten years
Treasury bonds
A government bond that can be issued for as long as 30 years
National debt
All the money the federal government owes to bondholders
Crowding out effect
The loss of funds for private investment due to government borrowing
Example: The government putting high taxes
Chapter 16
Monetary policy
The actions the Federal Reserve takes to influence the level of real GDP and the rate of inflation in the economy
Example: regulations on businesses
FOMC – Federal Open Market Committee
Federal Reserve committee that makes key decisions about interest rates and the growth of the United States money supply
Federal funds rate
interest rate banks charge each other for loans
Example: 5%
Discount rate
Rate the Federal Reserve charges for loans to commercial banks
Example: 6%
Money creation
The process by which money enters into circulation
Example: by making it and giving it to banks
Required Reserve Ratio
Ratio of reserves to deposits required of banks by the Federal Reserve
Example: 2:1
Money Multiplier Formula
Amount of new money that will be created with each demand deposit, calculated as 1 / RRR
Excess reserves
Reserves greater than the required amounts
Example: having more in savings than what was needed
Prime rate
Rate of interest banks charge on short-term loans to their best customers
Example: 10%
Open market operations
The buying and selling of government securities to alter the supply of money
Example: buying and selling government properties
Monetarism
The belief that the money supply is the most important factor in macroeconomic performance
Easy money policy
Monetary policy that increases the money supply
Example: lower interest rates
Tight money policy
Monetary policy that reduces the money supply
Example: if there's high inflation
Quantitative easing
A type of monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective
Inside lag
Delay in implementing monetary policy
Example: delaying the introduction of a bill
Outside lag
The time it takes for monetary policy to have an effect
Example: how long it takes after the bill is introduced for people to actually follow it
1 Point: (x5)
- If anyone is looking for a strong opinionated article about tax exemptions, check it out right here where the author speaks about small business tax exemption competition! http://articles.chicagotribune.com/1992-06-20/news/9202240541_1_tax-exemption-tax-burden-commercial-operations
- This article offers a great summary of monetary policy when speaking about the policy in China! Definitely worth the read! http://www.economist.com/blogs/freeexchange/2015/05/chinas-economy
- This article describes the tax assessment process in Maryland it tells about the taxable value of homes there. http://www.nolo.com/legal-encyclopedia/should-you-challenge-your-property-tax-assessment-maryland.html
- This article asks the question of whether or not the US is hyperinflation imminent. The article is a great read and is a little bit lengthy but gives a description of hyperinflation and how it has a relationship with the USA. http://www.forbes.com/sites/mikepatton/2014/04/28/is-u-s-hyperinflation-imminent/
- This article speaks about entitlement spending and how it is the highest it has ever been in history. It's a great read whether you know a lot about the issue or nothing at all, but it blames both parties. http://www.usnews.com/opinion/articles/2012/12/19/the-shocking-truth-on-entitlements