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What is the single most important source of revenue for the national government?
income tax
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Why do you thing think the criteria for taxes must be equitable and efficient?
- so people don't get mad
- so they can easily get their money
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What is the most important way that local governments raise revenue?
property tax
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What is the federal reserve system?
the central bank of the united states
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Who appoints the 7 member FED Board of Governors? Who approves them?
- appointed by president
- approved by senate
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Exactly how do banks make a profit?
they loan out money and make money off the interest
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Why do low interest rates increase consumer spending?
when interest rates are lower people have more money to spend
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Why does more money become available for economic growth when people save?
they make interest on the money they saved, and spend it to put more money into the economy
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What is it meant when it is reported that the federal government has a balanced budget?
govt spends as much money as they make
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Who decides the availability of money and cost of credit?
FOMC- federal open market committee
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What is the purpose of the market basket?
- set group of goods and services that don't change
- used to figure cpi and inflation
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Why do economists like to convert statistical series to real terms?
to account for inflation
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What types of products might be included in the consumer price index?
goods and services that consumers buy
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What is macroeconomics?
the part of economics concerned with large-scale or general economic factors, such as interest rates and national productivity.
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What measurement do the economists use to measure long term economic growth?
real gdp
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What types of jobs are only for seasonal employment?
ski resort, lifeguard, chritmans sales people
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How does technological unemployment occur? What type of unemployment is this?
- machines take your job
- structural
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What is inflation?
general increase in prices and fall of purchasing value
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What is hyperinflation?
a situation where the price increases are so out of control that the concept of inflation is meaningless.
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What is stagflation?
persistent high inflation combined with high unemployment and stagnant demand in a country's economy.
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What is monetary policy?
- what the FED does
- keeps money stable
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What is fiscal policy?
taxing and spending
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During times of inflation, how are people on fixed income hurt?
there money doesnt buy as much
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What is the consumer price index (CPI)? What does it measure?
- measures changes in the price level of a market basket of consumer goods and services purchased by households.
- measures standard of living
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What are the tools of the Federal Open Market Committee?
interest rates, buying and selling of securties
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What are the FED's tools?
-open market operations, the discount rate, and reserve requirements.
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What are taxes?
how the government makes money
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What are the different types of unemployment?
- frictional- between jobs
- cyclical- recession
- structural- changes in nature of production
- seasonal
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give examples of topics that might be discussed in macroeconomics?
interest rates, taxes, national debt
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What are the Commanding Heights of an economy?
- critical secters that dominate economic activity
- 1. electricity production
- 2. heavy manufactoring
- 3. mining
- 4. transportation
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What are the 3 criteria for taxes?
- equitable
- simple
- efficient
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What are the functions of the FED?
- supervise of banking systems
- stability of financial markets
- central bank
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