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senior year! > Economics final 2 > Flashcards

Economics final 2 Flashcards

1
Q

what is inflation?

A

it is the rate at which the general level price of goods or services in an economy is rising

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2
Q

what are the 5 causes of inflation?

A
  1. demand pull inflation
  2. cost push inflation
  3. built in inflation
  4. monetary factors
  5. expectations
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3
Q

what is demand pull inflation?

A

when the demand for the goods or supply exceeds the supply leading to sellers increasing the price

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4
Q

what is cost push inflation?

A

when the cost of production increases for the business like materials and labor, therefore producers increase the price

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5
Q

what is built in inflation?

A

(wage price inflation)
when workers demand higher wages to keep up with rising prices

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6
Q

what are monetary factors?

A

when central banks increase the money supply at a rate faster than the growth of the economy.

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7
Q

what are the expectations that lead to inflation?

A

when people and businesses expect the prices to increase in the future which can lead to higher prices in the present

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8
Q

what is economic growth?

A

it is the increase in the production and consumption of goods and services within an economy over time

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9
Q

what are the 5 ways to measuring economic growth?

A
  1. gross domestic product (GDP)
  2. gross national product (GNP)
    3.Real GDP/GNP
  3. gross national income (GNI)
  4. per capita GDP/GNI
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10
Q

what is gross domestic product (GDP)

A

primary indicators that measure economic growth, represents the total monetary values of all goods and services produced, within a countries borders

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11
Q

what is gross national product (GNP)

A

measures the total monetary value of all goods and services, within a countries borders or abroad

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12
Q

what is real GDP/GNP?

A

adjusts for inflation by measuring the value of goods and services produced at constant prices (allows accurate comparisons of economic growth)

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13
Q

what is gross national income (GNI)?

A

measures total income earned by a countries residences

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14
Q

what is per capita GDP/GNI?

A

divides the total GDP or GNI by the population of the country, providing an average income per person

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15
Q

what is the business cycle?

A

it is the fluctuations in economic activity

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16
Q

what are the 4 business cycle phases?

A
  1. expansion:
    - phase of economic growth by rising output, employment and income levels, during that business are optimistic and consumers and investments increases
  2. peak:
    - highest point of the business cycle
  3. contraction:
    - decline in economic activity, less consumers and business are cautious
  4. trough:
    -lowest point
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17
Q

what is the importance of national taxes?

A

its the levels imposed by the government on everyone to generate revenue for funding government operations and public services

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18
Q

what are the 4 types of national taxes?

A

1- revenue generation
2- redistribution of wealth
3- economic stablization
4- incentivizing behaviour

19
Q

what is revenue generation?

A

national taxes are the primary source of revenue for government, they fund public services, health care, and more

20
Q

what is the redistribution of wealth?

A

national taxes can be used to redistribute wealth and promote social equity, meaning higher tax on higher income and trying to reduce inequality through social wellfare programs

21
Q

what is economic stablization?

A

taxes can help manage the economy. When the economy slows down, governments can adjust taxes and spending to boost demand, create jobs, and help the economy bounce back.

22
Q

what is incentivizing behavior?

A

taxes on harmful behavior like pollution or unhealthy products can discourage consumption

23
Q

what are the 5 tax structures?

A

1- progressive tax:
higher income = higher rate of tax
2- regressive tax:
lower income = higher rate of tax
3- proportional tax:
same rate of tax on everyone
4- direct tax:
taxes placed directly on people or businesses
5- indirect tax:
taxes imposed on goods, services, or transactions

24
Q

what are federal taxes?

A

taxes collected by the government to pay for its spending

25
Q

what are the 5 types of federal taxes?

A

1- income taxes:
imposed on individuals and businesses based on their income
2- payroll taxes:
withheld from employees’ wages (paycheck) to fund social security and medical programs
3- corporate taxes:
imposed on the profits of corporations
4- excise taxes:
imposed on specific goods or services like alcohol
5- estate and gift taxes:
imposed on the transfer of wealth from one person to another, (gift) during life or (estate) death

26
Q

what are the 5 federal spendings?

A

1- mandatory spending
2- discretionary spending
3- defense spending
4- non-defense discretionary spending
5- other spending categories

27
Q

what are mandatory spending?

A

government spending set by-laws
examples: social security, medicare and medicaid

28
Q

what is discretionary spending?

A

Discretionary spending is the money Congress decides on each year for various federal agencies and programs. This includes things like defense, education, healthcare, and law enforcement.

29
Q

what is defense spending?

A

federal expenditures on national defense like military weapons

30
Q

what is non-defense discretionary spending?

A

federal expenditures on non-military programs like education and healthcare

31
Q

what are other spending categories?

A

expenditures like emergency spending and capital investments

32
Q

what are the 8 ways of budgeting at the state level?

A

1- revenue projection
2- prioritization
3- agency requests
4- budget development
5- legislative approval
6- implementation
7- monitoring and oversight
8- adjustments

33
Q

how is revenue projection a way of budgeting?

A

State governments begin by predicting how much money they’ll get from different places like taxes (income, sales, property), federal grants, fees, and other sources.

34
Q

how is prioritization a way of budgeting?

A

State governments focus on funding important areas like education, healthcare, transportation, public safety, and social services according to what the people need, what laws say, and how the economy is doing.

35
Q

how are agency requests a way of budgeting?

A

Every state agency asks for money for the next year in their budget requests.

36
Q

how is budget development a way of budgeting?

A

Government leaders, often led by the governor’s office, review agency requests to create a budget, deciding where to allocate funds based on priorities.

37
Q

how is legislative approval a way of budgeting?

A

The state legislature reviews and approves the proposed budget, making changes if needed before it becomes law.

38
Q

how is implementation a way of budgeting?

A

Once approved, state agencies follow the budget by managing funds, hiring staff, and delivering services.

39
Q

how is monitoring and oversight a way of budgeting?

A

State governments check spending during the year to make sure it follows the plan and the law.

40
Q

how are adjustments a way of budgeting?

A

state budgets may be adjusted throughout the fiscal year in response to changing economic conditions

41
Q

what are the 5 ways of state spending patterns?

A

1- education
2- healthcare
3- public safety
4- transportation and infrastructure
5- social services (charity)

42
Q

what is fiscal policy?

A

governments use of tax which promotes economic growth, controlling inflation and reducing unemployment

43
Q

what are the 5 characteristics of fiscal policy?

A

1- instrument of demand management:
governments control taxes to stimulate demand
2- longer implementation time
3- political considerations
4- coordination with monetary policy (enhances their effectiveness in stabilizing the economy)
5- multiplier effect:
change in government spending or taxation leads to a magnified impact

44
Q

what are 3 things that show the importance of fiscal policy?

A

1- stabilizing the economy
2- addressing market failures
3- redistributing income and wealth (equality)

senior year! (9 decks)

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