Chapter 20

Question 1

taxable income

Answer 1

total income of an individual minus certain deductions and personal exemptions

Question 2

a dependent

Answer 2

one who depends primarily on another person for such things as food, clothing and shelter

Question 3

progressive tax

Answer 3

based on a taxpayer’s ability to pay

Question 4

withholding

Answer 4

the money an employer withholds from workers’ wages as payment of anticipated income tax

Question 5

IRS

Answer 5

a bureau that collects income tax through its regional centers

Question 6

audit

Answer 6

check more closely

Question 7

social insurance taxes

Answer 7

the money collected by the gov’t to pay for major social programs

Question 8

regressive tax

Answer 8

tax in which people with lower incomes pay a larger portion of their income

Question 9

excise taxes

Answer 9

taxes on the manufacture, transportation, sale, or consumption of goods and the performance of services

Question 10

customs duties

Answer 10

taxed levied on goods imported into the US

Question 11

protective tariff

Answer 11

high customs duty

Question 12

securities

Answer 12

financial instruments that include bonds notes, and treasury bills

Question 13

national debt

Answer 13

gov’t borrowing money to fund annual budget deficits over time

Question 14

Office of Management and Budget (2)

Answer 14

• responsible for preparation of the budget

- confers with the president on a wide range of budgetary matters

Question 15

uncontrollables

Answer 15

expenditures required by law or resulting from previous budgetary commitments

Question 16

entitlements

Answer 16

benefits that Congress has provided by to individuals

Question 17

Congressional Budget Act of 1974 (created what? what did that creation do?)

Answer 17

• CBO

- carefully evaluate the overall federal budget for Congress

Question 18

Gramm-Rudman-Hollings Act

Answer 18

forced the president and Congress to work together to reduce budget deficits

Question 19

Budgetary Enforcement Act of 1990

Answer 19

divided the budget into 3 areas: domestic policy, defense, and internal affairs

Question 20

Where the money goes/Expenditures (3)

Answer 20

• direct benefits payments (Social Security, social welfare/health care programs, and uncontrollable expenditures)
• national defense
• discretionary spending (environment, transportation, criminal justice)

Question 21

Expenditures

Answer 21

government spending of revenues

Question 22

Fiscal Policy

Answer 22

using gov’t spending and taxation to influence the economy

Question 23

gross national product

Answer 23

sum of all goods and services produced in the nation in a year

Question 24

Monetary Policy

Answer 24

involves controlling the supply of money and credit to influence the economy

Question 25

The Federal Reserve System (Fed)

Answer 25

central banking system of the United States

Question 26

Board of Governors

Answer 26

supervises the entire Federal Reserve System

Question 27

discount rate

Answer 27

the rate the Fed charges member banks for loans

Question 28

reserve requirement

Answer 28

the % of money member banks must keep in Federal Reserve Banks as a reserve against their deposits

Question 29

open market operations

Answer 29

the means the Federal Reserve System uses to affect the economy by buying or selling gov’t securities on the open markey