Economics:Competency 3

  1. What are five economic goals for the government?
    • law&order
    • promote economic security
    • Invest in our future
    • promote market competition
    • stabilize the economy
  2. When does a fiscal year begin and end?
    begins Oct. 1st, ends Sept. 30th
  3. Whata re the top five categories government spends on?
    • defense and security
    • medicade, medicare
    • social security
    • saftey net programs
    • interest on debt
  4. Where does government get the most money from taxes?
    Personal income taxes
  5. What is another name for payroll tax?
  6. What do local government spend the most on?(1)
  7. What are the highest sources of tax revenue for local governments?(3)
    • state and federal money
    • property taxes
    • user charges
  8. What do state governments spend the most on? (3)
    • aid to local gov'ts
    • social services
    • education
  9. What are state gov'ts highest sources of tax revenue?(4)
    • federal aid
    • sales taxes
    • user charges
    • personal income tax
  10. What are the five characteristics of a good tax?
    • effiecient to collect
    • there should be a good reason
    • fair
    • certain
    • simple
  11. What are the two approaches to taxes?
    • benefits-recieved principle: you pay in proportion to what you recieve
    • ability to pay principle: those with lower incomes pay less
  12. What are regressive taxes?
    rich people pay lower % of income
  13. What are progressive taxes?
    poor people pay lower % of income
  14. What are the three functions of money?
    • medium of exchange
    • store of value
    • measure of value
  15. medium of exchange
    accepted by all as payment
  16. store of value
    can be saved
  17. measure of value
    describes relative value of goods and services
  18. What are the three kinds of money?
    • commodity money
    • representitive money
    • fiat money
  19. commodity money
    anything that serves as money and commodity
  20. fiat money
    • declared money by gov't decree
    • no value in itself
  21. is credit card money?
    no it is a loan
  22. What are the two types of money in the US?
    • currency (dollar bills, coins)
    • checkable deposits (checks, debit cards)
  23. How do banks create money?
    fractional reserve banking system
  24. What does the FED do for us?
    • clears checks
    • prevents bank runs w/ FDIC
  25. What is the Gross Domestic Product (GDP)?
    value of all goods and services produced in an economy in a year
  26. recession
    decline in GDP for at least six months
  27. depression
    steep decline in GDP for at least 1 year
  28. Expansion
    phase of economic activity during which economy's total output increases
  29. inflation
    increase in economy's general price level
  30. purchasing power of money
    amounts of goods and services people can buy with their money
  31. What is the monetary policy?
    increasing/decreasing money supply
  32. What is fiscal policy?
    increasing/decreasing spending, taxes
  33. what are three actions the gov't takes with expansionary monetary policy?
    • buys back gov't bonds
    • lowers required reserve ratio
    • reduces interest it charges banks
  34. what are three actions the gov't takes with contractionary monetary policy?
    • sells gov't bonds
    • increases required reserve ratio
    • increases interest it charges banks
  35. what is the problem with monetary policy?
    relatively ineffective
  36. problem with fiscal policy?
    • leads to a burden on future generations
    • increases national debt
  37. What is budget deficit?
    annual (yearly) result of deficit spending
  38. What is Deficit Spending?
    Government spends more than it collects in tax revenue.
  39. Why do businesses not produce enough public goods on their own?
    There is little profit in doing so
  40. what is required reserve money?
    the portion of money required by gov't to stay in the bank
Card Set
Economics:Competency 3