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69 Cards in this Set

  • Front
  • Back
the part of ecomonic theory dealing with the economy as a whole and decisionmaking by large units such as government and unions
equilibrium wage
wage rate leaving neither a surplus nor a shortage in the market
Sin Tax
relatively high tax designed to raise revenue and discourage consumption of a socially undesirable product
Incidence of Tax
the final burden of the tax
Benefit principle of taxation
those who benefit from government goods and services should pay in proportion to the amount of benefits they recieve
Ability to pay principle of Taxaion
the belief that ppl should be taxed according to their ability to pay, regardless of the benefits they recieve
Proportional Tax
imposes the same percentage rate of taxation on everyone, regardless of income
Progressive Tax
a tax that imposes a higher percentage rate of taxation on persons with higher incomes
Regressive tax
tax that imposes a higher percentage rate of taxation on low incomes than on high incomes
Payroll Withholding Taxes
a system that requires an employer to automatically deduct income taxes from an employers paycheck and send it directly to the goverment
FICA Taxes
the Federal Insurance contribution Act tax levied on both employers and employees to pay for social security and medicare
Intergovernmental Revenue
funds collected by 1 leel of gov for that are distributed to another level of government for expenditures
Value Added Tax (VAT)
a tax placed on the value that manufactureres add at each stage of production
per capta
per peson
public sector
the part of the economy made up of private individuals
Private Sector
the part of the economy made up of private individuals
Transfer payment
a payment in which the gov recieves neither goods nor services
a tranfer payment level of government for another
Mandatory Spending
Spending autorized by law
Discretionary Spending
progrmas that recieve annual authorization
Fiscal year
9-12 month planning period
Executive Formation
The first step in the process to develop a a budget
Federal Budget Deficit
Expenditures are higher than revenues
Federal Budget Surplus
revenues are higher than surplus
Crowding Out effect
higher than normal interest rates occur b/c of gov spending
Barter economy
moneyless economy that relies on trade or barter
Medium of exchange
money or other substance genearly accepted in exchange
Measure of value
a common denominator that can be used to express worth in terms
Store of value
the property that allows purchasing power to be saved until needed
Inconvertible Fiat Money Standard
fiat money that cannot be exchanged for gold or silver
Federal Reserve System
Privately Owned publicaly contolled, central bank of US
Board of govenors
sets general policies for Federal Reserve and member banks to folloiw, regulates certain operations of state-chartered member banks and conducts some aspects of monetary policy
Federal Open Market Commitee
made up of 12 members: even members from Board of Governors, the president of NY district fed and 4 district Fed Reserve bank who serve one y ear rotating terms and they make decisions about the growth of $ supply and level of interest rates
Monetary Policy
actions by the Federal Reserve System to expand or contracct the money supply in order to affect the cost and availability of credit
Fractional Reserve System
System requiring financial institutions to set aside a fraction of their deposits in the form of reserves
Legal reserves
currency and deposits used to meet the reserve requirement
Reserve Requirement
formula used to compute the amount of a depository institution required reserves
Excess Reserves
financial institutions cash, currency, and reserves not needed to back existing loans; potential source of new loans
Discount rate
Interest rate that the Federal Reserve System charges on loas to th nations financial institutions
Open market operations
monetary policy in the form of US treasurey bills or bond sales and purchases or both
the dollars that become available for investors to use when others save
absence of spending that frees resources for use in other activities or investments
capital formation
when ppl save making money available to go back into the econ
Gross domestic product
dollar value of all final goods, services, and structures produced within a coutnrys nat'l borders during a 1 yr period
rise in the general level of prices
Price Index
Statistical series used to measure changes in the price level overtime
Market basket
representative colleection of goods and services used to comple a price index
Consumer Price Index
Index used to measure price changes for a market basket of frequently used consumer items
Producer Price Index
index used to measure prices recieved by domestic producers
state of working for less than 1 hour per week for pay or profit in a non-family owned business while being available and having made an effort to find a job during the past month
unemployment rate
ratio of unemployed individuals divided by total # of persons in the civillian labor force, expressed as percentage.
Frictional unemploymen
unemployment caused by workers changing jobs or waiting to go to new ones
Structural unemployment
unemployment caused by a fundamental change in the economy that reduces the dmand for some workers
Cyclical unemployment
unemployment directly related to savings in the business cycle
Seasonal unemployment
unemployment caused by annual changes in the weather or other conditions that prevail at certaini times of the year
technological unemployment
unemployment caused by technological developments or automation that mkae some worker's skills obsolete
Market structure
market classification according to # and size of firms type of product, type of competition
Perfect competition
charactarized by a large # of well-informed independent buyers and sellers who exchange identical prouducts
Imperfect competitior
all conditions of pure competition arent met
monopolistic competition
has all conditions of perfect competition except for identical products form imperfect competition
product differentiation
real or imagined differences b/w competitng products in the same industry
non price competition
competition involving the advertising of products appearance quality or design rather than its price
market sturcture in which a few large sellers dominate and have the ability to affect prices in the industry rom imperfect comp.
Economics of scale
increasingly efficent use of personnal plant and equp. as a frim becomes larger
Market failure
market where any of the reurements for a competitive market-adequate comp., knowledge of prices, and opportuniteies, mobility of resources or comp. profits are lacking
economic side effect that affects an uninvilved 3rd party
neg externality
harmful side effect that affects uninvolved 3rd party
pos. externaility
beneficial side effect that affects univnolved 3rd party
Public goods
econ product that is consumed collectively highways, national defense, police and fire protection