Macroeconomics Ch. 3,4

Question 1

4 major ways government interferes with trade?

Answer 1

Protective tariffs, import quotas, non-tariff barriers, and export subsidies

Question 2

Households in US?

Answer 2

105 million

Question 3

3 other sources of household income

Answer 3

Corporate stock, bonds and savings and rental income

Question 4

Poorest 20% of families receive in 1999?

Answer 4

4% of personal income

Question 5

Richest 20% of families receive in 1999?

Answer 5

50%

Question 6

2 reasons for saving?

Answer 6

Security and speculation

Question 7

Define saving

Answer 7

Part of after-tax income that is not spent

Question 8

3 things consumers divide their spending?

Answer 8

Services, durable goods, non-durable goods

Question 9

What are services?

Answer 9

Work done FOR consumers by e. g. Lawyers, doctors, barbers etc.

Question 10

% of consumer spending on services?

Answer 10

58%

Question 11

Multi plant firms are organized…

Answer 11

Horizontally

Question 12

Name examples of horizontal multiplant firms

Answer 12

Multiple bottling plants of coca cola and individual Walmart stores

Question 13

Conglomerate?

Answer 13

Firm that has plants producing products in several industries

Question 14

Sole proprietorship

Answer 14

An unincorporated firm owned and operated by one person

Question 15

Partnership

Answer 15

An unincorporated firm owned and operated by two or more persons

Question 16

3 types of firms?

Answer 16

Sole proprietorship, partnership, and corporation

Question 17

Firm

Answer 17

A business organization created to produce goods and/or services

Question 18

Sole proprietorships and partnerships are both very…

Answer 18

Limited

Question 19

Money is…

Answer 19

Financial Capital

Question 20

2 ways corporations can raise financial capital?

Answer 20

The selling of stocks and the selling of bonds

Question 21

What does it mean that stock holders have limited liability?

Answer 21

The stockholders risk only what they paid for their stock

Question 22

Corporations are able to take advantage of…

Answer 22

Mass-production technologies and division of labor

Question 23

Double taxed?

Answer 23

Corporate profit that is shared among stockholders as dividends is taxed twice as corporate profits and as stockholders’ personal income

Question 24

How does an LLC distribute profits?

Answer 24

Directly to its owners and investors; an LLC shields the personal assets of owners from liability claims

Question 25

Elaborate on S corporation

Answer 25

Owners avoid double taxation and enjoy limited liability

Question 26

Market failure occurs when…

Answer 26

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

Question 27

Two ways the government can correct for spillover costs

Answer 27

Legislation and specific taxes

Question 28

Top four areas of federal spending?

Answer 28

Pensions and income security, national defense, health and interest on public debt

Question 29

Top three sources of federal revenue

Answer 29

Personal income tax, payroll tax, and corporate income tax

Question 30

Why are government purchases exhaustive?

Answer 30

The products purchased directly absorb resources and are a part of the domestic output.

Question 31

How large are government tax revenues as a % of total U.S. output?

Answer 31

28%

Question 32

Corporation

Answer 32

A business organization owned by investors called shareholders