econ 3-4 quiz taxes Flashcards
budget surplus
when income is greater than spending
budget deficit
when spending is greater than income
balanced budget
when revenue is equal to or greater than total expenses
fiscal policy
use of government spending and taxation to influence the economy
keynesian economics
economic theory that states that aggregate demand is the primary driver of an economy
deficit spending
when gov spends more money than they receive in revenue
austerity
set of economic policies that governments use to reduce their budget deficits
multiplier effect
idea that small change in one economic factor can cause a much larger change in another factor
debt
sum of money borrowed for a certain period of time and will be returned with interest
deficit
when the government spending exceeds its revenues
mandatory spending
government expenditures that are required by existing laws
discretionary spending
money spent on non essential items
federal reserve
the us central bank
monetary policy
set of actions to control a nations overall money supply and achieve economic growth
reserve requirement
minimum amount of money a bank must keep in cash as a percentage of its total deposits
federal funds rate (discount rate)
interest rate that banks charge eachother when lending reserve balances overnight
open market operations
market that features free competition and prices determined by supply and demand
credit score
number that represents a persons creditworthiness and likelihood of paying back a loan
annual percentage rate (apr)
yearly interest generated from a loan or earned on an investment (total annual cost of borrowing money, as a percentage)
credit card
card that lets you borrow money from the provider to make a purchase that you pay back later
debit card
card that lets you use money directly from your bank account to make a purchase. money is deducted immediately
checking account
financial account that one can use to make everyday purchases without using cash
saving account
account at a bank that is designed to hold money
progressive tax
tax that takes a larger percentage of income from high income groups
regressive tax
tax that takes a larger percentage of income from low income groups
proportional tax
tax where all income levels are taxed at the same rate
federal income tax
tax from government on annual earnings of legal entities based on income level
state income tax
percentage of money that you pay to the state government based on the income you make at your job
corporate taxes
direct tax levied on income or capital of corporations
payroll taxes
tax paid on wages and salaries of employees to finance programs like social secuirty and medicare
capital gains taxes
taxes levied on earnings made from sale of assets
property taxes
tax levied on immovable property like land and buildings, as well as movable property like vehicles
sales taxes
consumption tax on the sale of goods as services charged as a percentage of retail cost
tax deductions
a provision that reduces taxable income
tax credits
provision that reduces a tax payers final tax bill
tax avoidance
action taken to lessen tax liability and maximize after-tax income
tax evasion
failure to pay or underpayment of taxes
tax base
total value of all assets, income, and economic activity that can be taxed
marginal tax rate (tax bracket)
amount of additional tax paid for every additional dollar earned as income
effective tax rate
average tax rate for an individual or corporate taxpayer
