Fundamental Concepts
Consumers will buy more of a good when its price is low and less when its price is high. This is called...
law of demand
What is a tariff?
Tax on imports or exports
The federal budget lists spending (____________), and income (____________)
Expenditure, Revenue
What kind of tax is Medicare
proportional tax (flat tax)
Give an example of substitution goods and an example of complementary goods.
Substitution: Hamburgers/hot dogs, coffee/tea Complementary: Hamburger/bun, ice cream/cone
Which type of business is a separate legal entity from its owner and has limited liability?
Corporation
What is the FDIC?
The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by Congress to maintain stability in the nation’s financial system. The FDIC insures deposits and examines and supervises financial institutions for safety, soundness, and consumer protection.
How often must individuals and businesses file an income tax return?
Every year
Draw a supply and demand graph on the board. Label each access and each curve.
On board
What is the purpose of a protective tariff?
Shields domestic industries from foreign competition
From which source does the federal government receive the most income?
Individual income taxes
When you borrow money using a credit card, A. you must pay interest no matter how quickly you pay the money back. B. you will get the best interest rate if you wait several months to repay the purchase. C. you must pay the money back with interest if you wait longer than the grace period.
C. you must pay the money back with interest if you wait longer than the grace period.
Describe what the acronym TINSTAAFL stands for and what is meant by it.
T=There; I=is; N=no; S=such; T=thing; A=as; A=a; F=free; L=lunch
means Someone has to pay for the
production or service, so you may get an item or service free.
Say whether this is true or false and why: An increase in the price of bananas will shift the demand curve for bananas to the left.
This is false. The price of the good is not a demand shifter. A change in the price moves us to a new point along the same demand curve. The curve does not shift.
Describe the main difference between monopolistic competition and oligopoly and provide an example of each.
Monopolistic competition: many competing firms, fast food Oligopoly: few competing firms, airlines
What is the purpose of the Federal Reserve?
Manage the economy by controlling the money supply
In terms of auto insurance, A. liability coverage is optional and collision coverage is mandatory B. liability coverage is mandatory and collision coverage is optional C. liability coverage and collision coverage are mandatory D. liability coverage and collision coverage are optional
B. liability coverage is mandatory and collision coverage is optional
Name and describe two types of unemployment.
Structural Unemployment Workers’ skills do not match those needed for jobs now available Seasonal Unemployment Occurs when industries slow or shut down for a season or make seasonal shifts in their production schedules Cyclical Unemployment Rises during economic downturns and falls when the economy improves
payroll tax, FICA is a U.S. federal payroll tax.
It stands for the Federal Insurance Contributions Act and is deducted from each paycheck.
Joe can fix 20 phones or 5 computers in one day. Bill can fix 15 phones or 3 computers in one day. Who has the absolute advantage in each item? Who has the comparative advantage in each item? Who should specialize in each item?
Joe has an absolute advantage in both. Joe has a comparative advantage in computers and should specialize in them. Bill has a comparative advantage in phones and should specialize in them.
If the President's Office of Management and Budget (OMB) wants to get his/her budget approved for the fiscal year...what is the next step they would take?
Congressional action (breaks the budget into 12 major expenditure categories and assigns each to a separate House subcommittee.
What is the range of credit scores? Which end is good and which is bad?
300-850, higher is better