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