Key Vocabulary #1
What is the name of the office that prepares the President's Annual Budget Report?
Office of Management and Budget (OMB)
What Federal/Bureaucratic Organization is responsible for "collecting taxes?"
The Internal Revenue Services (IRS)
What is a W2?
A document that is given out each year at the end of the year. It informs an employee how much money they made during that year.
1. What is the FIRST Economic Function of the Government listed on our slides?
2. What two things does COMPETITION promote?
1. Safeguarding competition and the market system
2. It promotes (a) the efficient use of scarce resources & (b) consumer satisfaction
1. What is the FIRST Function of Taxation listed on your slides?
2. Give one example that was provided for you regarding this function:
1. Pay for the Cost of the Government
2. Running things like DMV, Postal Services, & Congress
2. What is a Categorical Grant?
1. Federal grants given automatically to states or communities to support broad programs (such as community development and social services)
2. Federal grants for specific purposes (building an airport)
2. Write a quick definition for this Tax:
1. Federal Income Tax
2. A tax the federal government imposes on personal income in order to provide services
What is a W4?
A document given to an employee by their place of employment when they first start working and their exemptions are declared
1. What is the SECOND Economic Function of the Government listed on our slides?
2. Write down two examples of Public Goods/Services listed on the slide:
1. Providing public goods and service
2. Police Force, Street Lamps, Public Parks, and Public Libraries
1. What is the SECOND Function of Taxation listed on your slides?
2. What two examples did I list in the slides for this Function?
3. What % of the federal Budge does Medicare make up?
1. Redistribute Wealth
2. Medicare & Welfare
3. 22%
1. What/Who does Medicare cover?
2. What/Who does Medicaid cover?
1. A federal program of health insurance for persons 65 years of age and older
2. A federal and state assistance program that pays for health care services for people who cannot afford them.
2. What is an Indirect Tax?
1. A tax an individual pays directly to the government
2. A tax levied on goods or services rather than on persons or organizations
1. Define Gross Income:
2. Define Net Income:
1. Money, goods, services, & property a person receives that must be reported on a tax return.
=> Includes unemployment compensation and certain scholarships.
=> It does not include welfare benefits and nontaxable Social Security benefits.
2. What is left over after taxes are taken out of a person's income
1. What is the THIRD Economic Function of the Government listed on our slides?
2. Define what this Function means.
3. Give one Example:
1. Correcting for harmful externalities
2. A side effect of an economic activity, one that imposes costs on the public (pollution)
3.Possible Answers - Vehicle Pollution, Household Waste, Noise Pollution, Air Pollution (Smoking), Traffic Congestion, Gambling Addiction, Litter from Tourists, Spill Over Costs from Obesity
1. What is the THIRD Function of Taxation listed on your slides?
2. How does the Federal Government accomplish this?
3. Define/Explain what a Tariff is:
1. Promote Certain Industries
2. Instate a Protective Tariff
3. A tax on foreign goods meant to encourage people to buy/protect domestic goods
1. Define a "Negative/Harmful Externality."
2. Give two examples of Negative Externalities.
1. A side effect of economic activity, one that imposes costs on the public
2. Possible Answers - Vehicle Pollution, Household Waste, Noise Pollution, Air Pollution (Smoking), Traffic Congestion, Gambling Addiction, Litter from Tourists, Spill Over Costs from Obesity
1. What is a Property Tax?
2. What Proposition caps Property Taxes in the State of CA?
3. [Extra Credit] What percent is the tax capped at and what year was the Proposition created?
1. Tax on tangible and intangible possessions such as real estate, buildings, furniture, stocks, bonds, and bank accounts
2. Prop. 13
3. 3% and 1978
1.What tax do both Federal and State governments require citizens to pay?
2. What tax(es) do you have to pay when someone dies? (List both the Federal and State taxes)
1. Income Tax
2. Federal - Estate Tax & State - Inheritance Tax
1. What is the FOURTH Economic Function of the Government listed on our slides?
2. Define Fiscal Policy:
1. Maintaining Economic Stability
2. The Federal Government’s use of TAXING and SPENDING to regulate a nation’s economy
1. What is the FOURTH Function of Taxation listed on your slides?
2. What is one example I listed on your slide for this Function?
3. [Extra Credit] GDP made up of Consumer Spending, Business Spending, and [name the THIRD form of Spending]?
1. Influence Consumer-Spending and Business-Spending Patterns
2. Lowering Taxes on new Businesses
3. Government Spending
1. Define a "beneficial externality."
2. Provide One example of a Beneficial externality.
3. What did Jonas Salk create?
1. DEF - a side effect of an economic activity that provides a source of enjoyment for the public
2. Possible Answers Immunizations, Restoring Historical Buildings, and/or Research into new technologies
3. Polio Vaccination (No More Iron Lungs!!!)
1. Define a Progressive Tax (You may draw a picture to represent a Progressive Tax)
2. Define a Regressive Tax (You may draw a picture to represent a Regressive Tax)
3. Define a Proportional Tax (You may draw a picture to represent a Proportional Tax)
1. A tax for which the percentage of income paid in taxes increases as income increases
2. A tax for which the percentage of income paid in taxes decreases as income increases
3. A tax in which the average tax rate is the same at all income levels.
1. Define Gift Tax:
2. How do you potentially circumvent this issue? Specifically, what amount /quantity of cash can be given annually as a gift and not taxed??
1. A tax created to prevent wealthy persons from giving away their property so their heirs could avoid the ESTATE TAX
2. $12,500
1. What are the last two Economics Functions of the Federal Government as listed on your slides?
2. Where does the majority of the Federal Government's Budge go?
3. What two categories comprise the SECOND largest expenditure for the Federal Government?
1. Redistributing Income and Wealth & Redistributing Resources
2. Medicare, Medicaid, & CHIP (22%)
3. Defense/Military (20%) & Social Security (20%)
1. What is the FIFTH Function of Taxation listed on your slides?
2. Define a Sin tax:
3. What two examples did I list with this Function?
1. To Discourage Certain Behavior
2. A relatively high tax designed to raise revenue and discourage consumption of a socially undesirable product
3. Tobacco and Alcohol