Economic Policy and Its Impact
What does fiscal tax influence?
The health of a nation’s economy
Who creates the federal budget?
The president and his advisors
What is property tax?
A percentage value of your land/house.
The more income you earn, the BLANK percent you pay in a Progressive tax
Higher.
What is a Marginal Tax Rate?
The tax bracket percentage that your total taxable income falls into.
Give one example of an intended consequence of an economic policy decision made by the government.
Examples: Spur economic growth, increase consumer spending, increase employment
What is a limitation on the president and his advisors' powers in creating the federal budget?
Congress has to approve it
What is personal income tax a percentage of?
Gross income
How is a progressive tax achieved?
By creating tax brackets that group taxpayers by income range
What is the most important tax revenue source for the United States?
Individual taxes
Give one example of an unintended consequence of an economic policy decision made by the government.
Examples: Unforeseen problems, backlash against programs/spending, increased inflation, increased deficit/debt.
What is Federal Debt?
The total accumulated sum of money that the U.S. owes (other countries, bonds/securities).
What does personal income tax fund?
Social Security and Medicare.
How to Calculate Effective Tax Rate:
Total Taxes paid / Total income
What is a policy to the business cycle going near a peak?
Contractionary Fiscal Policy
What is a policy to a downward slope from a peak to a trough on the business cycle?
Expansionary Fiscal Policy
What is a Federal deficit?
The one-year difference between government revenue and expenditures.
How do tariffs help protect domestic businesses?
Tax on imports.
Why is a proportional tax also known as a flat tax?
Everyone pays the same percentage of their income
Define Social Security, Medicare, and Entitlements and if they are all permanent or short-term
Social Security: Retirement/disability (permanent).
Medicare: Government-funded health care coverage (permanent).
Entitlements: Includes Social Security, Medicare, and other benefits (permanent).
How does the Expansionary Fiscal Policy method work?
Decrease Taxes / Increase Government Spending.
Difference between mandatory vs discretionary spending
Mandatory is required by law; discretionary may vary by administration.
Example of what sales tax funds
Example: Roads
How does a regressive tax work?
Takes a larger percentage of income from low-income earners than from middle- and high-income earners
Define Government Stimulus Checks, Government Grants, and Cash for Clunkers and if they are all permanent or short-term
Government Stimulus Checks: One-time payments intended to spur spending (short-term).
Government Grants: Financial assistance for various purposes (can be short or long-term).
Cash for Clunkers: A program intended to promote growth in the auto industry (short-term).