Trade Barriers / Gov. Regs
a limit on the number of imports or exports on a certain product
quota
when a specific person or enterprise is the only supplier of a particular commodity
monopoly
What is one of the main roles of the Federal Reserve?
influencing money supply, regulating and monitoring economic institutions, making government payments, stabilizing the economy
What is your "taxable income"?
The amount of income that is subject to taxation
phase in the business cycle characterized by shrinking GDP, high unemployment, and many business closures
depression
a tax on imports or exports on a certain class of goods
tariff
type of merger in which two companies that provide a similar good or service combine
horizontal
What is a "fractional reserve" system?
banks are required to have a certain percentage of their accounts in cash at any given time
What is a tax deduction?
a way to lower your taxable income
phase in the business cycle characterized by a fall in GDP, unemployment rises, demand weakens
recession
a legal right that grants the creator of an original work (typically music, movies, art, etc.) exclusive rights to determine whether, and under what conditions, this original work may be used by others
copyright
a type of merger in which two seemingly unrelated firms combine
conglomerate
What is the most common method the Fed uses to influence economic growth?
changing the interest rate
What is a tax credit?
a dollar for dollar reduction in your tax liability (amount you owe)
phase in the business cycle characterized by high demand, GDP growth, low unemployment
prosperity
license conferring a right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention
patent
type of merger in which two companies along the supply chain combine
vertical merger
What are the target rates of inflation and unemployment?
2% inflation
5% unemployment
Describe each of the following:
flat tax (proportional)
progressive tax
regressive tax
flat = everyone pays the same percentage
progressive= more you make, higher the percentage
regressive= takes a higher proportion of people with lower income
phase in the business cycle characterized by rising GDP, shrinking unemployment, and growing demand
recovery
a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive
subsidy
What are three benefits of having competition in our economy?
low prices, more variety, innovation, motivation to work hard
What are the three different ways the fed can try to speed up or slow down the economy?
Adjust the interest rate
Change the reserve requirement
Carry out open market operations (buy or sell bonds to put more or less cash into circulation)