Money
Does money have intrinsic value?
No
Gold
Commodity money
What are government outlays
government spending + transfer payments
What is a progressive tax?
People with higher incomes pay a larger portion of their income in taxes than people with lower incomes do
What is the rule of 70?
70/x=t
t= number of periods required to double an investment's value
x= the interest rate per period as a percentage
What happens if you don't pay your taxes
Your wages can be garnished
You can forcibly be put in jail
Commodity money
What 2 things does the government spend the most on?
Social Security
Medicare
What is a marginal tax rate?
The tax rate paid on an individual’s next dollar of income.
How do you calculate %change in real GDP?
%change in nominal GDP-% change in price level
What two meanings does the word deposits have?
1. the act of placing U.S. paper dollars or a check with the bank
2. the act of placing U.S. paper dollars or a check with the bank
Money that has no value except as the medium of exchange
Fiat money
What happens if the government taxes more than it spends?
It will run a surplus
What kind of tax system does the US use
A progressive tax
How do you find the %change in real GDP per capita
%change in nominal GDP-% change in prices- %change in population
What are the functions of money
Medium of exchange
“A” unit of account
Store of value
money that has value because government decree
Fiat money
What does it mean when the Federal government runs a deficit
When the government spends more than the revenue it generates
What is an average tax rate?
The total tax paid divided by the amount of taxable income
What does the GDP deflator account for?
change in price level
What is Fractional reserve banking
When banks hold only a fraction of deposits on reserve
Money that is backed by gold
Commodity-backed money
When do government deficits generally occur
During recessions
What was the highest marginal tax rate in US history?
94%
What is the formula for calculating nominal GDP growth (assume the base year is 2000 and the current year is 2020)
GDP2020-GDP2000/GDP2000 x100