Macro Econ Chapter 3

Front 1

Utility

Back 1

Satisfaction recevied from consumption; sense of well-being. household maximize it.

Front 2

proprietors

Back 2

ppl who wrk for themselves rather than employers.

Front 3

transfer payments

Back 3

cash or in-kind benefits given to individuals as outright grants from the gov.

Front 4

3 spending categories for households

Back 4

1. durable goods.
2. nondurable goods
3. services

Front 5

industrial revolution

Back 5

development of large-scale factory production. began in GB around 1750

Front 6

Firms

Back 6

econ units formed by profit-seeking entrepreneurs who emply resources to produce goods and services for sale. maximize profit

Front 7

sole proprietorship

Back 7

most common. a single owner firm. has unlimited liability. only generates 4% of all U.S business sales.

Front 8

Partnership

Back 8

firm with multiple owners who share profits and bear unlimited liability for firms losses and debts. easier to get $ to fund business. Least common form of business. 13% of all business sales

Front 9

Corporations

Back 9

19% of U.S business. 83% of all sales. Legal entity owned by stockholder's. liability limied to value of their stock ownership.

Front 10

advantages of corporations

Back 10

many investors can pool funds. stockholders liability for any loss is limited to value of their stock. corporation has life apart from its owners

Front 11

disadvantages of corporation

Back 11

stockholder's ability to influence corporate policy is limited to voting for a board of directors. double taxation.

Front 12

S Corporation

Back 12

hybrid corporation tht has limited liability and avoids double taxation. to qualify, a firm can't have more than 100 stockholders and no foreign stockholders.

Front 13

Cooperatives "Co-op"

Back 13

an org. tht has ppl who pool their resources to buy and sale more efficiently than they cld individually. try to minimize cost and operate with limited liability members.

Front 14

two types of cooperatives

Back 14

consumer co-ops
producer co-ops

Front 15

consumer co-op

Back 15

retail business ownded and operated by some/all of its customers in order to reduce costs. operates credit unions, electric power facilities, etc.

Front 16

producer co-op

Back 16

producers join to buy supplies and equipment and to market thier out-put. reduce cost and increase profits.

Front 17

non-profit orgs

Back 17

grps tht dnt pursue profits as a goal. engage in events with a social purpose. usually exempt from taxes. revenue from volunteers or service charges.

Front 18

market failure

Back 18

unregulated operation of markets yields socially undesirable results.

Front 19

role of government

Back 19

establish and enforce rules of the game. Promote Competition. regulate natural monopolies. equal distribution of income. fostering healthy economy.

Front 20

collusion

Back 20

agreement among firms to divide the market and fix the price. gov. prohibit this.

Front 21

monopoly

Back 21

sole supplier of a product with n o close substitutions

Front 22

natural monopoly

Back 22

one firm tht can supply the entire market at a lower per-unit cost than could two or more firms.

Front 23

fiscal policy

Back 23

use of gov purchases, transfer payments, taxes and borrowing.

Front 24

private goods

Back 24

rival in consumption and exclusive.

Front 25

rival in consumption

Back 25

the amount consumed by one person is unavailable for others to consume

Front 26

exclusive

Back 26

supplier of private good can exclude those who don't pay

Front 27

public goods

Back 27

nonrival in consumption, nonexclusive, government provides through taxes, private firms can't sell them profitably.

Front 28

monetary policy

Back 28

regulation of the money supply.

Front 29

national/federal gov

Back 29

national security, econ stability, market competition.

Front 30

state gov

Back 30

public higher education, prisions, highways, welfare

Front 31

local gov

Back 31

primary and secondary education, police, fire protection

Front 32

Gross Domestic Product (GDP)

Back 32

total value of all final goods and services provided in U.S. one way to track gov impact overtime.

Front 33

sources of gov revenue

Back 33

individual income tax: fed gov
income tax: state gov
Property tax: local gov

Front 34

ability to pay tax priniciple

Back 34

those with a greater ability to pay should pay more taxes. earning higher incomes, owning more property.

Front 35

benefits-received tax principle

Back 35

those who get more benefits from gov program shld pay more.

Front 36

tax incidence

Back 36

who bears burden of tax

Front 37

proportional tax: under tax incidence

Back 37

tax payers at all income levels pay the same % of their income in taxes "flat tax"

Front 38

progressive tax: under tax incidence

Back 38

% of income paid in taes inc as income inc.

Front 39

marginal tax rate

Back 39

shows % of each additional $ of income tht goes to taxes.

Front 40

regressive tax: under tax incidence

Back 40

% of income paid in taxes dec as income inc. ex. most payroll taxes.

Front 41

merchandise trade balance

Back 41

value of country's exported goods minus the value of its imported goods.

Front 42

balance payments

Back 42

record of all economic transactions btwn residents of 1 country and residents of the rest of the world.

Front 43

foreign exchange

Back 43

foreign money needed to carry out international transactions.

Front 44

exchange rates

Back 44

price of 1 current in terms of another.

Front 45

trade restrictions

Back 45

tariffs, quota. higher prices hurt domestic consumers.

Front 46

tariff

Back 46

tax on imports

Front 47

quota

Back 47

legal limit on the quantity of a particular product tht can be imported or exported.