Macroeconomics Ch. 3,4 Flashcards
4 major ways government interferes with trade?
Protective tariffs, import quotas, non-tariff barriers, and export subsidies
Households in US?
105 million
3 other sources of household income
Corporate stock, bonds and savings and rental income
Poorest 20% of families receive in 1999?
4% of personal income
Richest 20% of families receive in 1999?
50%
2 reasons for saving?
Security and speculation
Define saving
Part of after-tax income that is not spent
3 things consumers divide their spending?
Services, durable goods, non-durable goods
What are services?
Work done FOR consumers by e. g. Lawyers, doctors, barbers etc.
% of consumer spending on services?
58%
Multi plant firms are organized…
Horizontally
Name examples of horizontal multiplant firms
Multiple bottling plants of coca cola and individual Walmart stores
Conglomerate?
Firm that has plants producing products in several industries
Sole proprietorship
An unincorporated firm owned and operated by one person
Partnership
An unincorporated firm owned and operated by two or more persons
3 types of firms?
Sole proprietorship, partnership, and corporation
Firm
A business organization created to produce goods and/or services
Sole proprietorships and partnerships are both very…
Limited
Money is…
Financial Capital
2 ways corporations can raise financial capital?
The selling of stocks and the selling of bonds
What does it mean that stock holders have limited liability?
The stockholders risk only what they paid for their stock
Corporations are able to take advantage of…
Mass-production technologies and division of labor
Double taxed?
Corporate profit that is shared among stockholders as dividends is taxed twice as corporate profits and as stockholders’ personal income
How does an LLC distribute profits?
Directly to its owners and investors; an LLC shields the personal assets of owners from liability claims
Elaborate on S corporation
Owners avoid double taxation and enjoy limited liability
Market failure occurs when…
The competitive market system produces the “wrong” amount of certain goods and services or fails to allocate any resources whatsoever to the production of certain services whose output is economically justified
Two ways the government can correct for spillover costs
Legislation and specific taxes
Top four areas of federal spending?
Pensions and income security, national defense, health and interest on public debt
Top three sources of federal revenue
Personal income tax, payroll tax, and corporate income tax
Why are government purchases exhaustive?
The products purchased directly absorb resources and are a part of the domestic output.
How large are government tax revenues as a % of total U.S. output?
28%
Corporation
A business organization owned by investors called shareholders
