Gov Rev
What is a sin tax?
A tax on an item believed to be morally wrong
Name a bible verse/principle that could be used on the issue of debt.
neither a borrow or a lender be
give to each what he is due
the borrower is slave to the lender
parable of the talents (investing)
care of the poor
tax cuts are an example of this for the federal government
discretionary spending
Their deposits are used to fund the loans
What is a flat tax? Is it progressive, regressive, or proportional and why?
Ends up being more regressive than proportional because of the disparate value of the income to the individual
Who is responsible for paying for Social Security and Medicare?
The Federal gov
What are automatic stabilizers? Give examples.
Policies/programs that already exist that adjust with the economy helping to stabilize it
unemployment insurance
tax brackets- progressive taxation
High levels of government borrowing can hurt private industries by taking up the available credit.
What is this called?
The crowding out effect
Describe proportional taxation.
Each income bracket pays an equivalent portion of their income
Give examples of things the local government is responsible for.
schools, police, utilities, fire dept, roads
What is the formula for GDP and what does each part mean?
C + I + G +(E-I)
Consumption, Investment, Gov Spending, Net Exports
What is the Fed and
what part of the Fed is most responsible for interest rates?
the central bank of the US responsible for monetary policy which operates mostly independently
The Federal Open Market Committee
Contrast progressive and regressive taxation.
Progressive- charging the higher income brackets more
Regressive- charging the lower income brackets more
Give two reasons that the US debt is less of a concern.
In terms of percentage of GDP, our debt is lower than many other countries.
Other nations have an invested interest in the continued success of the US econ
Debt can be a tool for peace in the world because it makes nations reliant on one another.
Describe supply side economics.
Using decreases in business taxes and regulations to lower the price of producing a product with the end goal of reducing consumer prices, increasing employment, and creating economic growth.
Describe tight money policy.
The Fed pulling money out the economy through increasing the discount rate, selling bonds, and increasing the reserve requirement making credit more expensive
Name and explain three criteria of effective taxes.
Timely, targeted, fair, simple, efficient
Give two reasons why the US debt is a significant concern.
Debt is much higher in terms of percentage of GDP than it has historically been.
Much of our borrowing is just to pay interest on our debt.
Describe Keynesian economics.
Using taxes and government spending to stimulate the economy when consumer/business spending drops. Believes that by doing so they can infuse confidence back into the economy leading to economic growth
Describe easy money policy
The Fed putting more money into the economy through decreasing the discount rate, buying bonds, and lowering the reserve requirement making credit less expensive