Chapter 20 Flashcards
taxable income
total income of an individual minus certain deductions and personal exemptions
a dependent
one who depends primarily on another person for such things as food, clothing and shelter
progressive tax
based on a taxpayer’s ability to pay
withholding
the money an employer withholds from workers’ wages as payment of anticipated income tax
IRS
a bureau that collects income tax through its regional centers
audit
check more closely
social insurance taxes
the money collected by the gov’t to pay for major social programs
regressive tax
tax in which people with lower incomes pay a larger portion of their income
excise taxes
taxes on the manufacture, transportation, sale, or consumption of goods and the performance of services
customs duties
taxed levied on goods imported into the US
protective tariff
high customs duty
securities
financial instruments that include bonds notes, and treasury bills
national debt
gov’t borrowing money to fund annual budget deficits over time
Office of Management and Budget (2)
- responsible for preparation of the budget
- confers with the president on a wide range of budgetary matters
uncontrollables
expenditures required by law or resulting from previous budgetary commitments
entitlements
benefits that Congress has provided by to individuals
Congressional Budget Act of 1974 (created what? what did that creation do?)
- CBO
- carefully evaluate the overall federal budget for Congress
Gramm-Rudman-Hollings Act
forced the president and Congress to work together to reduce budget deficits
Budgetary Enforcement Act of 1990
divided the budget into 3 areas: domestic policy, defense, and internal affairs
Where the money goes/Expenditures (3)
- direct benefits payments (Social Security, social welfare/health care programs, and uncontrollable expenditures)
- national defense
- discretionary spending (environment, transportation, criminal justice)
Expenditures
government spending of revenues
Fiscal Policy
using gov’t spending and taxation to influence the economy
gross national product
sum of all goods and services produced in the nation in a year
Monetary Policy
involves controlling the supply of money and credit to influence the economy
The Federal Reserve System (Fed)
central banking system of the United States
Board of Governors
supervises the entire Federal Reserve System
discount rate
the rate the Fed charges member banks for loans
reserve requirement
the % of money member banks must keep in Federal Reserve Banks as a reserve against their deposits
open market operations
the means the Federal Reserve System uses to affect the economy by buying or selling gov’t securities on the open markey
