Term
|
Definition
total $ value of all final G/S produced within a country during 1 calendar year |
|
|
Term
|
Definition
avg amt produced by each citizen in a year |
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
durable g/s vs non-durable g/s |
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
the total value of all capital goods produced during 1 year |
|
|
Term
|
Definition
|
|
Term
|
Definition
schools, highways, national defense |
|
|
Term
|
Definition
|
|
Term
|
Definition
amt of all g/s that will be purchased @ all possible prices |
|
|
Term
economies should strive to reach __/__ equilibrium |
|
Definition
|
|
Term
what causes AD to shift? (3) |
|
Definition
1 changes in consumer spending (consumer optimism) 2 changes in gov influence (higher tax) 3 changes in investment spending (more spending) |
|
|
Term
|
Definition
total amt of all G/S available at all possible prices |
|
|
Term
what causes AS to shift? (4) |
|
Definition
1. changes in input rises (all price go up) 2. changes in productivity (asssembly line invented) 3. changes in the legal environment (limits on pullution) 4. changes in labor supply (labor supply decreases) |
|
|
Term
|
Definition
flunctuations in a market's activity |
|
|
Term
how are flunctuations in a biz cycle measured |
|
Definition
by increases & decreases in the real GDP |
|
|
Term
|
Definition
a period of economic growth (rising GDP) |
|
|
Term
|
Definition
when real GDP stops rising |
|
|
Term
|
Definition
|
|
Term
|
Definition
bottoming out; when GDP stops falling |
|
|
Term
|
Definition
when new peak exceeds previous one |
|
|
Term
|
Definition
when GDP falls for 2 consecutive quarters |
|
|
Term
|
Definition
|
|
Term
|
Definition
a decline in GDP (more unemployment)with a rise in prices (inflation) |
|
|
Term
what influences the business cycle (3) |
|
Definition
1. public perception 2. effects of war 3. interest rates |
|
|
Term
|
Definition
|
|
Term
war can ___ an economy in the short term |
|
Definition
|
|
Term
if war drags on, the ecomonmy will most likely _____ |
|
Definition
|
|
Term
|
Definition
the cost of "buying" money |
|
|
Term
if interest rates are high, money is _____ |
|
Definition
|
|
Term
if economy appears to be slowing down, gov might _____ the interest rate |
|
Definition
|
|
Term
if the real GDP rises but not as fast as the population, what will happen to the standard of living |
|
Definition
|
|
Term
economic growth is critical for a nation to maintain its.... |
|
Definition
|
|
Term
|
Definition
economic well being of a nation's people |
|
|
Term
|
Definition
required payment to the gov |
|
|
Term
|
Definition
|
|
Term
without _____, gov cannot function |
|
Definition
|
|
Term
|
Definition
the common defense & general warfare |
|
|
Term
|
Definition
|
|
Term
federal taxes must be ___ in every state |
|
Definition
|
|
Term
who can congress NOT tax? |
|
Definition
|
|
Term
amendment that allows congress to tax incomes on an UNEQUAL basis |
|
Definition
|
|
Term
|
Definition
income, property, G/S that is being taxed |
|
|
Term
|
Definition
|
|
Term
|
Definition
tax on the $ value of a sale |
|
|
Term
|
Definition
tax on the value of a property |
|
|
Term
|
Definition
tax on the value of a company's profits |
|
|
Term
|
Definition
tax that is same percentage for everybody |
|
|
Term
|
Definition
|
|
Term
|
Definition
% of income paid in taxes INCREASES as income increases |
|
|
Term
which tax can cause poor people to pay nothing |
|
Definition
|
|
Term
|
Definition
% of income paid in taxes DECREASES as income increases |
|
|
Term
|
Definition
also sales tax bc the amt a rich person makes is MUCH MORE than the 6% that will be spent |
|
|
Term
|
Definition
1. simplicity 2. efficiency (gov shouldn't spend more $ to collect than they receive) 3. certainty 4. equity (system should be fair to all) |
|
|
Term
|
Definition
employers withold money from your check & forward it to gov |
|
|
Term
|
Definition
|
|
Term
FICA (Federal INsurance Contributions Act) |
|
Definition
social security, disabled americans, surviving fam of deceased wage-earners, medicare |
|
|
Term
|
Definition
federal tax on sale/manufacture of a good |
|
|
Term
|
Definition
tax on total value of the $ & property of a deceased person |
|
|
Term
|
Definition
prevents people from giving their estates away before death to avoid the estate tax |
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
general increase in prices |
|
|
Term
|
Definition
|
|
Term
as prices rise, purchasing power ____ |
|
Definition
|
|
Term
|
Definition
prices NOT adjusted for inflation |
|
|
Term
|
Definition
prices that ARE adjusted for inflation |
|
|
Term
CPI (consumer price index) |
|
Definition
measures price of "a market basket" |
|
|
Term
|
Definition
bureau of labor statistics ; every month |
|
|
Term
inflation rate interval that causes few problems |
|
Definition
|
|
Term
inflation rate that shows economy can become unstable |
|
Definition
|
|
Term
|
Definition
out of control inflation... can go as high as 100% to 500% per month |
|
|
Term
|
Definition
occurs when gov prints TOO MUCH $ |
|
|
Term
|
Definition
when demand for G/S exceeds supplies |
|
|
Term
when does demand-pull inflation occur |
|
Definition
during wartime or after natural disaster |
|
|
Term
cost-push inflation (worst one) |
|
Definition
producers raise prices to meet increased costs |
|
|
Term
ex of cost-push inflation |
|
Definition
increase in min wage & gasoline; gov regulation |
|
|
Term
pollution restrictions make doing business ____ |
|
Definition
|
|
Term
inflation rates often ____ wage raises, leading to a _____ |
|
Definition
exceed ; net loss of income |
|
|
Term
inflation is bad for ____ |
|
Definition
|
|
Term
inflation is good for _____ |
|
Definition
|
|
Term
|
Definition
sustained drop in price levels |
|
|
Term
|
Definition
|
|
Term
|
Definition
a government policy for dealing with the budget (especially with taxation and borrowing) |
|
|
Term
fiscal policy is determined by ? (2) |
|
Definition
1. collecting taxes 2. spending $ |
|
|
Term
who controls fiscal policy |
|
Definition
|
|
Term
what is expansionary policy used for (2) |
|
Definition
to raise GDP & pull economy out of recession |
|
|
Term
how does congress go about expansionary policy (2) |
|
Definition
1. spend more $ 2. cut taxes |
|
|
Term
what is contractionary policy used for |
|
Definition
to slow down the economy growth which could would have caused inflation |
|
|
Term
how does congress go about contractionary policy (2) |
|
Definition
1. cut spending 2. raise taxes |
|
|
Term
fiscal policy: classical economics |
|
Definition
adam smith - laissez faire |
|
|
Term
fiscal policy: keynesian economics |
|
Definition
gov should spend more $ by building schools, airports etc to create jobs |
|
|
Term
demand-side economy goes with which person? |
|
Definition
|
|
Term
supply-side believe in ____ _____ |
|
Definition
|
|
Term
2 problems w/ demand-side theory |
|
Definition
1. increased gov spending during bad times 2. massive gov savings during good times |
|
|
Term
|
Definition
they don't use extra profit to hire new workers |
|
|
Term
|
Definition
gov spends more than it takes in |
|
|
Term
|
Definition
gov takes in more than it spends |
|
|
Term
what does deficit lead to? |
|
Definition
|
|
Term
|
Definition
total $ gov owes to bondholders |
|
|
Term
every year the gov runs a deficit, it must ____ money to operate |
|
Definition
|
|
Term
to borrow $, the gov sells ____ aka _____ |
|
Definition
|
|
Term
|
Definition
loss in value of the dollar |
|
|
Term
interest on national debt per year |
|
Definition
|
|
Term
what does the gov do to attract bond purchasers |
|
Definition
offer high interest rates |
|
|
Term
|
Definition
The actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. |
|
|
Term
Federal Reserve Act of 1913 |
|
Definition
created the Federal Reserve System (fed) composed of 12 regional banks |
|
|
Term
|
Definition
board of governors that lend $ to private banks |
|
|
Term
"the lender of last resort" |
|
Definition
the Federal Reserve acts as the lender of last resort to institutions that do not have any other means of borrowing and whose failure to obtain credit would dramatically affect the economy. |
|
|
Term
|
Definition
|
|
Term
|
Definition
1. processes all gov payments (social security, IRS refunds) 2. makes interest payments on gov bonds 3. responsible for issuing currency |
|
|
Term
fed does check cleansing which is ... |
|
Definition
process by which banks record whose account gives/receives $ |
|
|
Term
banks hold ____ of their funds in reserve, the rest is ____ to its customers |
|
Definition
|
|
Term
the fed ensures that each banks keeps the required amount in ______ |
|
Definition
|
|
Term
Required Reserve Ratio (RRR) |
|
Definition
the amt the bank must keep on hand |
|
|
Term
|
Definition
|
|
Term
|
Definition
total amt of currency held by indivudals, plus $ in bank accounts |
|
|
Term
by controlling money supply, fed influcnes... (2) |
|
Definition
1. growth of GDP 2. rate of inflation |
|
|
Term
3 methods fed uses to control amt of money in ecomonmy |
|
Definition
1. altering the reserve requirements 2. open market operations 3. setting interest rates |
|
|
Term
reducing the RRR causes ____ in money supply |
|
Definition
increase (banks are allowed to lend more $) |
|
|
Term
increasing the RRR causes _____ in money supply |
|
Definition
decrease (bank loans are limited) |
|
|
Term
when fed buys gov bonds/securities, bond sellers receive $ that enters the economy and the money supply _____ |
|
Definition
|
|
Term
when fed sells bonds/securities, money supply ____ |
|
Definition
|
|
Term
|
Definition
interest rate the fed charges on loans to other banks |
|
|
Term
lowering the discount rate makes loans ____ |
|
Definition
|
|
Term
how do banks respond to lowering discount rate (aka loans are cheaper) |
|
Definition
|
|
Term
|
Definition
interest rate banks charge their customers |
|
|
Term
when discount rate is loowered, money suppply _____ |
|
Definition
|
|
Term
|
Definition
introduced during periods of expansion & inflation |
|
|
Term
3 methods for tight money policy |
|
Definition
1. increase RRR 2. sell gov securities 3. increase discount rate |
|
|
Term
|
Definition
introduced during times of contraction &receession |
|
|
Term
3 methods for loose money policy |
|
Definition
1. lower RRR 2. buy gov securities 3. lower discount rate |
|
|