Unit 5

those who receive more benefits from the government program funded by a tax should pay more of that tax

those with a greater abbility to pay, such as those with higher income, should pay more of the tax

indicates who actually bears the burden of a tax

the tax as a percentage of income remains constant as income increases; also called flat tax

the tax as a percentage of income increases as income increases

the tax as a percentage of income decreases as income increases

the percentage of each additional dollar of income that goes to pay a tax

a plan for government spending and revenues for a specified period,usually a year

taxes deducted from paychecks to support social security and medicare

the objective assumed to guide the behavior of elected officials; comparable to profit maximizations by firms and utility maximization by household

a stance adopted by voters when they find that the cost of understanding and voting on a particular issue exceeds the benefit expecterd from doing so

Government agencies charged with implementing legislation and financed through legislative bodies

the economy's maximum sustainable outbput in the long run

the unemployment rate when the economy is producing its potential level of output

a group of laissez-faire economists, who believe that economic dowturns corrected themselves in the long run through natural market forces

matching annual spending with annual revenue, except during way years; approach to the federal budget prior to the Great Depression

any change in fiscal policy affects aggregate demand by more than the original change in spending or taxing

legislative changes in government spending or taxing to promote macroeconomic goals

government spendingand taxing programs that year after year automatically reduce fluctuationin disposable income, and thus inconsumption, over the business cycle

the time needed to identify a macroeconomic problem

the time needed to decide hat to do once the problem has been identified

the time needed to execute a change in policy

the time needed for changes inpolicy to affect the economy

private investment falls when larger government deficits drive up interest rates

government spending stimulates private investment in an otherways stagment economy

anything generally accepted by all parties in payment for goods or services

anything that serves both as money and as a commodiy, such as gold

only a portion of bank deposits is backed by reserves

a written order instructing the bank to pay someone from an amount deposited

bank notes that exchange for a specific commodity, such as gold

money of no value in itself and not convertible into gold, silver, or anything else of value; declared money by government decree

interst rate the Fed charges banks that borrow reserves

Twelve-member group that makes decissions about open-market operation

Established in 1913 as the central bank and monetary authority of the States

the narrow definition of the money supply; consists of currency (including coins) held by the nonbanking public, checkable deposits, and traveler's checks

deposists in financial institutions against which checks can be written and ATM, or debit, cards can be applied

a broader definition of the money supply, consisting of M1 plus saving deposits, small-denomination time deposits, and money market mutual fund accounts owned by households

assests minus liabilities; also called owners' equity

any physical property or finacial claim that is owned

an amount owed

a finacial statement showing assets, liabilities and net worth at a given time; assets must equal liabilities plus net worth, so the statement is in balance

a Fed regulation that dictates the minimum fraction of deposits each bank must keep in reserve

the dollar amount that must be held in reserve; checkable deposits multiplied by the required reserve ratio.

bank reserves in excess of required reserves

the multiple by which the money supply can increase as a result of an increase in excess reseres in the banking system

the relationship between how much money people want to hold and the interest rate

the stock of money available in the economy at a particular time

a market for overnight lending and borrowing of reserves held by the Fed for banks

the interest rate banks charge one another to borrow reserves overnight; the Red's target interest rate

the new european common currency