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55 Cards in this Set
- Front
- Back
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Government funding |
taxation |
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Tax systems |
Progressive Regressive Proportional |
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Progressive |
As income increases, the percent of taxes paid increase |
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Regressive |
As income increases, the percentage of taxes paid falls |
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Proportional |
Regardless of income, the same proportional percent of taxes are paid |
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Tax Base |
Value of all taxable assets Ex. Income, Wealth, Property |
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Double taxation |
Income taxes are paid twice; corporations are considered separate entities than shareholders |
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Tax incidence |
Distribution of tax burden among various groups in society |
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Capital Gain |
Positive difference between sales price and purchasing price |
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Social security taxes |
Taxes taken out & given to the retired elderly; everyone worker person pays into SS |
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Dynamic Tax Analysis |
As income tax increases, tax revenue will eventually fall as well |
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Excise Tax |
Tax made on a specific good or service |
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Solutions to social security |
Increase the amount of SS taxes paid into by young, able workers Decrease the amount of benefits taken out of SS |
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Rate of unemployment |
Percentage of the workforce that isn't working Unemployed ÷ labor force |
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Total Civilian Labor Force |
Employed + Unemployed |
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Unemployed |
Those who aren't actively seeking work |
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Types of Unemployment |
Frictional Structural cyclical |
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Frictional |
Leave one job for a better job that you already have lined up |
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Structural |
As the structure of the economy begin to change, you are no longer have the skills able to successfully complete a job |
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Cyclical |
Goes up & down; caused by insufficient spending |
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Why can the unemployment rate of zero not be expected? |
Someone is always switching jobs, seeking a job or unemployed |
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Full employment |
Balance in an ever-shifting labor market |
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Deflation |
Substantial decrease in the price level |
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Inflation & Purchasing Power |
As the price level begins to increase, the value of the dollar goes down, meaning you can buy less goods & services with a dollar as inflation increases Decline in the purchasing power of money |
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Consumer Price Index |
Price of a basket in the current year ÷ price of a basket in the base year × 100 |
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Nominal Value |
Value of a good or service in the current year |
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Nominal v. Real Rate of Interest |
Nominal - rate of interest observed in today's dollars Real - Nominal rate of interest - the expect inflation |
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Unanticipated Inflation |
Every individual in an economy is hurt |
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Purchasing Power |
How many goods or services a dollar can buy |
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Phases of a business Cycle |
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factor market |
Households are the sellers of land, labor, capital & entrepreneurship Businesses are buyers |
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Two sectors of the economy |
Product Markets & Factor Markets |
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What does GDP measure? |
Total market value of all final goods & services produced in a year |
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Two Principle Methods of measuring GDP |
Expenditure Approach C + I + G + Nx Income Approach W + I + R + P |
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What is not included in the calculation of GDP? |
Goods that are resold, sold illegally, or not completed final goods |
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Final good |
In the final stage of production & Won't be transformed into other goods or services |
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Expenditure Method |
C + I + G + Nx Consumption + Investment + Government Expenditures + Net Exports |
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Net GDP |
GDP minus depreciation |
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Capital Good |
Man made goods used to produce other goods |
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National Income |
Sum of wages + rent + interest + profit |
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Disposable Personal Income |
Personal income after personal income taxes have been paid out |
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Nominal v Real Values |
Nominal is the value of production in current market prices ; real values correct the changes in prices from year to year |
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Real GDP per capita |
How much output one person makes |
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Foreign Exchange rate |
Price of one currency in terms of another |
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Purchasing Power Parity |
a dollar at home can buy you just as much as a dollar over seas |
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Variable used to measure economic growth |
Productivity & Savings |
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Labor Productivity |
Real domestic output ÷ number of workers |
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Saving & Investment |
saving is knowing your money will still be there over time, investment is taking a risk with your money Trade-off for a higher risk by getting a better reward |
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Saving & Economic growth |
low interest= increase in investment spending |
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Patent |
Government protection against competition °increases monopoly °encourages research & development |
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New Growth Theory |
Factors that determine why technology, research, innovation & the like are undertaken & how they react |
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Innovation |
Transforming an invention into something that is useful to humans |
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Creative destruction |
New firms come, others are destroyed |
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Stages of economic development |
1. Agriculture 2. Manufacturing 3. Service |
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Development Economists |
Seek to understand why some economies prosper and others don't |
