economics final (multiple choice – Flashcards
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Fair labor standards act
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1. Establish a minimum wage rate 2. Eliminate detrimental working conditions 3. Protect the educational opportunities of youth
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Flat tax
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tax that imposes the same percentage rate of taxation on everyone, regardless of income
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What is a disadvantage of a flat tax?
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The flat tax removes behavior incentives in the tax code
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Alternative minimum tax
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personal income tax rate that applies whenever the amount of taxes paid falls below a designated level
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The alternative minimum tax ensured what?
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That people paid a minimum tax of 20 percent
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16th amendment
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allows congress to levy an income tax.
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example of mandatory spending?
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social security, medicare, and medicaid
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mandatory spending
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spending authorized by law that continues without the need for annual approvals of Congress
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The United States government accumulated huge deficits during the 1980s due to
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a doubling of spending on national defense
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The largest category of spending for most local governments is
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elementary and secondary education
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What is the purpose of the Federal Deposit Insurance Corporation (FDIC)?
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to make sure that customers do not lose money if a bank fails
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money that has an alternative use as an economic good is
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commodity money
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Investors who sign a contract guaranteeing them the option of selling shares of stock at a specified price in the future have agreed to a
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put option
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The efficient Market Hypothesis argues that
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stocks are always priced about right
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Junk bonds
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are exceptionally risky
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the par value of a bond is
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the total amount borrowed
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A non bank financial intermediary that primarily makes loans to construction companies for building homes is the
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real estate investment trust
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Baby boomers are those people born between
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1946 & 1964
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Economic growth benefits the government by
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enlarging the tax base
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The census is taken every
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ten years
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To determine Gross National Product
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add to GDP all payments received by Americans outside the US and subtract payments made to foreign owned resources in the US
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An index that reports on price changes for about 90,000 goods and services is the
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consumer price index
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The business cycle since World War II has been characterized by
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extended expansions alternating with brief recessions.
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Unemployment that is directly related to swings in the business cycle is
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cyclical unemployment
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According to the cost-push theory, inflation is caused by
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Workers
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The Federal Reserve System was established in
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1913
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liabilities are
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debts and obligations
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In the short run, an increase in the money supply results in
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lower interest rates
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Unlike many politicians, the Fed
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is concerned about short-term interest rates
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Misery Index
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a comprehensive measure of consumer discomfort during a period of rising inflation and high unemployment
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Aggregate demand will increase
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if consumers save less and spend more
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Unlike demand-side economics, supply-side economics
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advocates reduced government involvement in business
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According to Keyne's theory of the multiplier-accelerator effect, a decline in investment spending will
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lead to a downward spiral of the economy
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WTO
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international agency that administers trade agreements and settles trade disputes
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Smoot-hawley Tariff of 1930 resulted in
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the highest tariff rates in US history
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Revenue Tariffs are levied to
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raise money
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Before reunification with China in 1997, the economy of Hong Kong
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was the freest market economy in the world
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The keiretsu of Japan are
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made up of competing firms
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Stalin demonstrated the main advantage of a command system by
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increasing industrial output
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Advantages of socialism include
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equitable distribution of benefts
