OFL Economics Unit 4 – Flashcards
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aggregate supply
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real domestic output of producers based on the rise and fall of the price level
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situation when the amount of government spending exceeds its receipts during the fiscal year
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budget deficit
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tax that takes the same percentage of all incomes; as income rises, the amount of tax paid also rises
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proportional tax
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regressive tax
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tax that takes a larger percentage of lower incomes than of higher incomes
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total dollar value of all final goods and services produced in a nation in a single year
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gross domestic product (GDP)
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income redistribution
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government activity that takes income from some people through taxation and uses it to help citizens in need
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state and federal public-assistance program that helps pay health care costs for low-income and disabled persons
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Medicaid
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prime rate
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rate of interest that banks charge on loans to their best business customers
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narrowest definition of the money supply; consists of moneys that can be spent immediately and against which checks can be written
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M1
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Fed
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the Federal Reserve System created by Congress in 1913 as the nation's central banking organization, prints and maintains paper currency
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two commonly used price indexes
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consumer price index and the producer price index
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Taxes, spending policies, and control of the money supply
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aspects of government activity that affect business cycles
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lagging indicator leading indicator coincident indicator
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3 types of broad economic indicators
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medium of exchange store of value unit of accounting
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Functions of money
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The Great Depression
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most severe downturn in the economic history of the United States
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point to what will happen in the economy
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Leading indicators
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the medium of exchange that has value as a product or good aside from its value as money (e.g., cattle, gems, or salt)
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commodity money
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near moneys
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assets, such as savings accounts, that can be turned into money relatively easily and without the risk of loss of value
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18 months
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Amount of time it takes government to make a budget
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19%
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percentage of the GDP accounts for government purchases
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an indicator of government growth
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size of the government workforce
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Inflation
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the increase in prices and the decrease in purchasing power of money
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Recession
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part of the business cycle where the nation's output does not grow for at least 6 months
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medium of exchange store of value unit of accounting
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Functions of money
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characteristics money
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Durable, Portable, Divisible, Stable in Value, Scarce, Accepted
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Money supply increases
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when there is a reduction in the discount rate
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demerit good
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goods deemed to be socially undesirable such as smoking, drinking, gambling. These can be taxed or regulated by the federal government
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merit good
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goods deemed to be socially desirable such as museums, classical music, and ballet. Tax payers subsidize these activities
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five largest federal expenses
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Social Security national defense interest on debt health international affairs
