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28 Cards in this Set
- Front
- Back
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What is the functional distribution of income?
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Pg 73
Indicates how the nations income is apportioned among wages, rent, interest, and profits, that is, according to the function performed by the income receiver |
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What is the personal distribution of income?
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Pg 73
Indicates how the nations total income is divided among individual households. Pg 74 Divided in to quintiles 20% groups |
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How do households statistically dispose of their incomes?
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Pg 74
Consumption, taxes and save , consumption breaks down into 3 groups durable goods, nondurable goods and services. |
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What is the difference between a plant, a firm, and an industry?
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Plant – any physical place
Firm- owns one or more plants Pg 75 Industry- group of firms that produce the same or similar products |
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What is the difference between a sole proprietorship, a partnership, and a corporation?
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Sole- one person owns
Partnership- two or more individuals Corporation-separate legal creation. |
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Which group constitutes the largest segment of firms? Which one accounts for the largest amount of sales?
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Pg 76
Sole Propritorship |
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Why is the concept of "limited liability" important?
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Pg 76
Owner (stockholders) who risk inly what they paid for their stock, |
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Describe the "principle-agent problem".
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Pg 77
They represent the corporation and they have nothing at risk besides their salaries. |
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What is the difference between be "private sector" and the "public sector"?
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pg 77
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Identify some of the major functions that governments provide in support of economic activities.
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Pg 78, 79, 81
Establishes the legal system, competition, redistribute income or taxes, reallocating resources, promoting stability, |
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What is a monopoly?
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Pg 78 Single seller controls an industry
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What is a transfer payment?
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Pg 79 The form of welfare checks and food stamps, provide relief to the destitute, the dependant, the disabled, and older citizens
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What do economists mean by "market failures"?
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pg 79
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What is an externality?
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Pg 79 fund that benefit a third party. Cost that are born to a third party.
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What is the difference between a negative externality and a positive externality?
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Pg 79-80
Negative the third party bears the cost- sickness, lost job due to chemicals pumped into air. Positive – government provides something- flushot |
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Identify two characteristics of private goods
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Belongs to one person.
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Identify two characteristics of public goods.
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Do not have rivalry- public park can be used by more than one person
Nonrivalry, nonexcludability |
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Describe the "free-rider problem"
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Benefit for a public without having to pay for it. Someone from new York get to use a bridge in Illinois with out paying for it. (tax dollars)
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What is a quasi-public good?
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Include education, streets, and highways, police and fire, libraries, museums are provided.
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How do governments promote economic stability?
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Try to have jobs, create employment.
Keep interest rates low Inflation- |
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What new element is introduced into the circular flow of money when the public sector is included?
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Pg 83 chart
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What is Tax Freedom Day?
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Pg 84
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What are the major expenditure categories of the federal government?
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pg 84
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What are some of the major sources of revenue for the federal government?
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pg 84
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What is taxable income?
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pg 85
It’s your gross income adjusted for exemptions and deductions |
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What is a progressive tax?
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pg 85
People with higher incomes pay a larger percent |
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What is the difference between a marginal tax rate and an average tax rate?
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Pg 85
Marginal – is the rate at which the tax is paid on each additional unit or next dollar Average- is the total tax paid divided by the total taxable income. |
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How do sales taxes and excise taxes differ?
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Mainly one of coverage. Sales tax covers a wide range of products, excise- small , select list of commodities.
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