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34 Cards in this Set

  • Front
  • Back
expansion
the phase of the economic cycle when levels of employment and production are high and the economy is growing, generally accompanied by rising prices for goods and services
recession
the phase of the economic cycle when leveles of eomployment and production fall and growth of the economy slows
depression
the phase of the economic cycle when levels of employment and production are low and economic growth is at a virtual standstill
recovery
the phase of the economic cycle when levels of eomployment and production are improving and the economy is growing
gross domestic product (gdp)
the total of all goods and services produced in a country; used to monitor economic growth
inflation
a state of the economy in which the general price level is increasing
real property
tangible assets that are immovable, land and anything fixed to it such as a house
personal property
tangible assets that are movable and used in every day life
fair market value
the actual value of an asset or the price that it can reasonably be expected to sell for in the open market
liabilities
debts, such as credit card charges, loans and mortgages
current (short term) liability
any debt due within 1 year of the date of the balance sheet
long term liability
any debt due 1 year or more from the date of the balance sheet
net worth
an individual's or family's actual wealth; determined by subtracting total liabilities from total assets
equity
the actual ownership interest in a specific asset or group of assets
fixed expenses
contractual, predetermined expenses involving equal payments each period such as mortgage and installment loan payments, insurance
variable expenses
expenses involving payment amounts that change from one time period to the next, such as food, clothing, utilities, entertainment, medical
cash surplus
an excess amount of income over expenses that results in increased net worth. use it for savings or investments, acquire assets or reduce debt
cash deficit
an excess amount of expenses over income, resulting in insufficient funds as well as in decreased net worth.
rule of 72
a useful formula for estimating about how long it will take to double a sum at a given interest rate. # of yrs to double=72/annual compound interest rate
progressive tax structure
a tax structure in which the larger the amount of taxable income the higher the rate at which it is taxed
marginal tax rate
the tax rate you pay on the next dollar of taxable income
average tax rate
the rate at which each dollar of taxable income is taxede on average; calculated by dividing the tax liablility by taxable income
filing status
single taxpayers, married filing jointly, married filing separately, head of household, qualifying widow or widower with dependent child
federal withholding taxes
taxes- based on the level of earnings and the number of withholding allowances claimed-an employer deducts from the employee's gross earning each pay period
federal insurance contributions act (FICA) or social security tax
the law establishing the combined old-age, survivors's, disability, and hospital insurance tax levied on both employer and employee
taxable income
the amount of income subject to taxes; it is calculated by subracting adjustments, the larger of itemized or standard deductions, and exemptions from gross income
gross income
the total of all of a taxpayer's income (before any adjustments, deductions, or exemptions) subject to federal taxes; it includes active, portfolio, and passive income
three kinds of income
active - income earned on the job, portfolio- earnings generated from most investment holdings; including savings accounts, stocks bonds. passive - income derived from real estate, limited partnerships, and other forms of tax shelters
capital gains
occurs whenever an asset (such as stock, bond, real estate) is sold for more than its original cost
adjustments to gross income
allowable deductions from gross income, including certain employee, personal retirement, insurance, and support expenses
adjusted gross income (AGI)
the amount of income remaining after subtracting all allowable adjustments to income from gross income
itemized deductions
personal expenditures that can be deducted from AGI when determining taxable income
tax credits
deductions from a taxpayer's tax liability that directly reduce hi taxes due rather than taxable income. ex: credit for elderly or disabled, foreign tax credit, credit for prior year minimum tax, mortgage interest credit, credit for qualified electric vehicle
exemptions
deductions from AGI based on the number of persons supported by the taxpayer's income