Tax
What is the main purpose of taxes?
To provide revenue for government spending and public services.
In the circular flow model, households provide what to businesses?
Labor and resources.
When are all assignments due?
midnight
What is fiscal policy?
The government’s use of taxes and spending to influence the economy.
What does GDP stand for?
Gross Domestic Product.
The “pay-as-you-go” tax model means what?
Taxes are taken out of workers’ paychecks throughout the year.
In the circular flow model, businesses provide what to households?
Goods and services.
What is an example of structural unemployment?
A worker loses their job because new technology replaces their role.
During a recession, what fiscal policy action would Keynes support?
Increasing government spending and cutting taxes.
What does GDP measure?
The total value of all goods and services produced within a country in one year.
What type of tax takes a larger percentage of income as income increases?
Progressive tax.
What happens in the circular flow when consumer spending increases?
Business revenue and production rise.
1st
Which is the main trade-off of expansionary fiscal policy?
It can increase employment but also raise national debt.
How does consumer spending affect GDP?
Higher consumer spending increases GDP.
Why does the government prefer a pay-as-you-go tax system?
It keeps revenue flowing steadily throughout the year instead of once annually.
How does government spending enter the circular flow model?
By purchasing goods and services and paying income to households.
What is the best example of cost-push inflation?
Prices rise because production costs (like oil or wages) increase.
Which government action best represents contractionary fiscal policy?
Raising taxes and cutting government spending.
Which action would most likely increase a nation’s GDP?
Any increases in aggregate expenditures
A worker earns $3,000 monthly and pays $300 in federal taxes out of his pay check. Which system is this an example of?
Pay-as-you-go system
According to Keynes, what can the government do in the circular flow to stimulate growth during a recession?
Increase spending or lower taxes to boost aggregate demand.
What is Mr. McGinthy's favorite college sport to watch?
MSU Hockey
Why is fiscal policy controversial?
It can help the economy but also lead to long-term debt and inflation.
Why might a country’s GDP fall even if prices rise?
Because production decreases even as inflation pushes prices higher