Taxes
Taxes are...
The primary way the government collects revenue to operate and function
The total amount of money borrowed
What is National Debt?
What is it called when business spending multiplies as it makes way through the economy?
What is the multiplier effect?
What is the purpose of the Federal Reserve Bank?
It is the central bank of the US, meaning it prints and holds money
Monetary policy changes ___ ____ _____ _____ in the economy/
How much money flows
All income levels pay the same percentage
What is proportional tax structure?
What is classified as mandatory spending?
Social security, health, and interest on national debt
What is Fiscal Policy?
___ district banks oversee _____ banks
12; 3000
What are the 3 monetary policy tools?
1. Opening market rate
2. discount rate
3. reserve requirement
This service collects taxes
What is the IRS?
Social security, health, defense/homeland security, interest on national debt, and other discretionary costs.
People _____ government programs, making them _____ to stop them. This is counterproductive because Keynes policies are supposed be to _______, not ____ ____.
Like, hard, temporary, long-term
Why do the fed establish guidelines for running banks?
To ensure they comply with booking laws.
What are the 3 goals of monetary policy?
1. Full employment
2. Stable prices
3. Economic growth
What are the different types of taxes?
Income tax, sales tax, social security, sin tax, property tax
What is the largest part of the federal budget and why is it so hard to reduce it?
Mandatory spending - in order to reduce the spending, you would need to change the law.
The main goals of Fiscal Policy is to...
1. Promote stable prices
2. Encourage full employment
3. Employ economic growth
Why is the Federal Reserve Bank not a government agency?
It is independent from politics. The bank is privately owned but publicly controlled.
What is the difference between easy money policy and tight money policy?
Easy Money Policy: the Fed expands the amount of money circulating in the economy, spurring economic growth
Tight Money policy: the Fed can restrict money supply to try to slow down the economy during times of inflation or when there is a risk of inflation.
The flaw of this tax structure is that is punishes the wealthy.
What is progressive tax structure?
Politicians avoid doing these things in order to gain voters.
Cut programs and raise taxes on the wealthy, businesses, and the general population.
Supply-side: increasing the supply of goods leads to economic growth through increased employment and business expansion.
Demand-side: to increase GDP and employment, you must stimulate aggregate demand (AKA the government has to increase spending)
What are the Federal Reserve Bank's responsibilities?
Setting interest rates, managing money supply (printing and holding money), and to ensure maximum employment and stable prices.
This is considered the most effective tool of monetary policy and the government does this daily to affect the money supply.
What is open market operations?