Unit 5 Test Flashcards
1
Q
Three tax structures and what they are
A
- Proportional Tax: tax rate is constant at all income levels
- Progressive Tax: tax where as your income increases, your tax rate also increases
- Regressive Tax: as your income increases your tax rate decreases
2
Q
FICA (what does it pay for)
A
- Federal Insurance Contributions Act tax
- Pays for social security and medicare
3
Q
Excise Tax
A
- tax on sale or production
4
Q
Estate Tax
A
- tax on inheretance
5
Q
Mandatory Spending
A
- Entitlement Programs
6
Q
Entitlement
A
- welfare programs
- social security, medicare, medicaid
7
Q
Discretionary Spending
A
- Defense
- Education
- Foreign Aid
8
Q
Fiscal Policy
A
- The federal government’s use of taxes and spending to influence GDP and inflation
9
Q
Expansionary Fiscal Policy
A
- Changes that cause Deficits
- increase inflation
- increase GDP
- increase AD/AS
10
Q
Contractionary Fiscal Policy
A
- Changes that cause Surplus
- lowers inflation
- lowers GDP
- lowers AD/AS
11
Q
Multiplier Effect
A
- every dollar of govt. spending increases GDP by more than one dollar
12
Q
Balanced Budget
A
- revenues = expenditures
13
Q
Budget Surplus
A
- revenues > expenditures
14
Q
Budget Deficit
A
- revenues < expenditures
15
Q
National Debt
A
- total amount of money owed by the govt.
