Econ Final P3
Terms
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- How do increases taxes effect the economy?
- Slows down the economy.
- Current rate of inflation in the USA
- 3%
- What are the main type of taxes collected by the federal government?
- Income tax.
- Elastic Demand
- Demand that changes quickly in respect to price change
- What are the economice gains because of immigration?
- More efficient, cost less.
- Business cycle
- Economy goes through up and downs as a natural cycle
- AFL-CIO
- collection of uniors, 10 million workers
- Productivity's Effect on Supply
- High Productivity causes supply to shift right(more) because there is more being produced, therefore increasing supply. It is opposite for lowered productivity.
- NASDAQ Index
- largest electronic equity securities listing 3200 companies in US
- Deductible
- The amount of money which the insured party must pay before the insurance company's own coverage plan begins.
- Role of shares in corporate governance
- Piece of company. Each share equals a vote. Votes elect a Board of Directors.
- Compliments
- Use of one increases use of another.
- floating currency
- currency that uses flexible exchange rate is a type of exchange rate regime
- Income Transfer
- Where some of the money earned in a salary or from taxes, is used to help the lower class.
- Buying on Margin
- Buying stocks by way of a loan from a broker
- Entrepreneur
- someone who adds value to things (creates or improves) in order to sell it for a profit.
- Calculating PE Ratios
- Stock price/EPS
- Difference between our deficit and debt
- Deficit- when you spend more than you have in a year. Debt- accumulative total of all deficits over the years.
- Tariff
- Tax on foreign goods
- How many euros can one dollar buy right now?
- $1.4685
- Protectionism
- Blocking imports to protect local industries
- Calculating EPS
- Net Income / Shares Circulating
- What power do unions have?
- Collective bargaining(negotiate a contract), Campaign(help elect union friendly politicians), Picket(hold signs at work), Strike(refuse to work), and Boycott(don't buy company goods)
- Inelastic Demand
- Demand that remains steady in respect to price chagne
- Interpreting a Production Possibilities Frontier
- A diagram representing various combinations of good and/or services an economy can produce when all productive resources are fully employed.
- How is the value of the US dollar determined
- by the change in inflation and deflation
- Opportunity Cost
- The cost (lost benefit) of the thing you gave up. Ex: Giving up money from missing work to go to school.
- Why is it more likely that the government will regulate businessess who sel products with inelastic demand?
- Because then the economy won't be hurt as much due to the taxation and the government can get the money it needs.
- Tax Withholdings
- When employers are required to withhold a portion of each employee's income and pay it directly to the U.S. Internal Revenue Service. This withholding acts as a prepayment of tax they will owe at the end of the year, as well as a direct payment of certain other taxes.
- Finding the Supply and Demand Line on a Graph
- Supply increases as price increases, has a positive slope. Demand decreases as price increases, has a negative slope.
- GDP
- total number of final goods (goods, services, property) multiply by the price produced. The US GDP is 13 trillion.
- Law of Demand
- If supply is held constant, an increase in demand leads to an increased market price, while a decrease in demand leads to a decreased market price.
- Real GDP Growth
- GDP adjusted for inflation. It is equal to (GDP divided by the inflation rate) ( 3 %)
- Change the target for the Federal Funds Rate
- The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.
- Role of the FOMC
- The FOMC has 7 board members who meet with 5 district presidents to give advice to the chairman.
- Change the Discount Rate
- From 5 percent to 4-3/4 percent
- What are the main type of taxes collected by the California government?
- Income tax, sales tax, property tax.
- Sunk Cost
- Cost that an never be recovered
- Public Goods
- The consumption of this good by someone does not reduce the amount for others to consume, and no one can be effectively excluded from using this good.
- Substitutes
- Replace a product.
- Role of the FDIC
- Insures bank accounts up to $100,000.
- Difference between paying interest and paying principle
- Principle is paying down debt, paying interest is just interest
- Why does the government fund basic science?
- Because science is being paid, new discoveries may be found, which may spur the economy to create new jobs for others. If researchers aren't paid, there will be no incentive to progress science.
- How does the money multiplier work?
- Money that is loaned out gets placed into a bank account, and a fraction of that money is loaned out, and the process goes on.
- Incentives
- Something that motivates us
- Cost Benefit Analysis
- The process you go through to select the option that gives you the most benefit (utility).
- Changes on Consumer Taste Effect on Demand
- Moves demand line right and left.
- Index Fund
- collective investment scheme that aims to replicate the movement of index of specific financial market.
- Open Market Operations (buy/sell US bonds)
- Most flexible and most frequently used mean of implementing U.S. monetary policy. Open market operations enable the Federal Reserve to affect the supply of reserve balances in the banking system and thereby influence short-term interest rates and reach other monetary policy targets.
- Four Needs to a Healthy Market Economy
- Private property rights, freedom to make and spend money, freedom to exchange goods and services, freedom to keep your profits.
- Dow Jones Index
- Index of 30 largest largest and most widely held public companies in the United States.
- What are the qualities of effective taxes?
- 1) Equally applied 2) Simple to follow 3) Efficiently collected
- Quota
- Limit on number of foreign goods
- Who benefits from a strong US dollar
- consumers
- Dividends
- Check paid to stockholders, usually quarterly, representing portion of corporate profits
- What are the main type of taxes collected by the city government?
- Sales tax, property tax.
- How do we make a dollar stronger?
- Trade surplus and lower interest rates.
- Inflation
- increase of the price of some good
- What are the reasons for having taxes?
- 1) Raise money 2) Equalize wealth 3) Deter bad behavior
- Technology's Effect on Supply
- Technology causes supply to be shifted right because better technology makes it easier to produce goods.
- Cost of input changes effect on supply
- The more expensive the cost of inputs the lower the supply of products, and inversely the lower the costs of input the more products will be supplied.
- Stocks
- Certificate of ownership in a corporation; common or preferred stock
- How do governments and businesses use the power of incentives
- to maximize their profits/benefits
- What is the significance of the low and high PE ratio?
- A high PE ratio means that investors are paying more for each unit of income and low means investors are paying less for each unit of income.
- S&P 500 Index
- an index containing the stocks of 500 Large-Cap corporations, most of them being US corps.
- What is elastic supply?
- That demand is based on the supply(horizontal line).
- Privitization
- Letting the private sector take over an area that was typically run by the government.
- Alternative minimum income tax
- An extra tax some people have to pay on top of the regular income tax. The original idea behind this tax was to prevent people with very high incomes from using special tax benefits to pay little or no tax.
- Trade-Offs
- What you gave up when you made your decision. Ex: Sleep for school.
- Why were new currencies backed by valuable goods like gold?
- To instill faith in the users of the money. The customers then feel that if the currency becomes unreliable, they can cash their money into valuable items.
- What is the Federal Reserve
- the central bank of the United States
- Law of Supply
- Higher price, higher production. Lowered price, lowered production.
- Why doesn't the Fed just print money?
- The value of the dollar will go down. Inflation.
- Why do people invest in a company with a high PE ratio?
- The company may have high expected growth in earnings which would lower the PE ratio.
- Calculating Market Cap
- Shares Circulating x Stock Price
- what is inelastic supply?
- No matter the supply, there will always be the same demand(vertical line).
- Change the Reserve Requirement
- Banks and other depository institutions (savings institutions, credit unions, and foreign banking entities) are required to hold a portion of their deposits as reserves.
- What are the economic losses because of immigration?
- Native workers losses their jobs and there will be lower wages.
- GDP per Capita
- the dollar amount of real GDP produced on a person basis. The US GDP per Capital is 43K.
- Short Selling
- Selling more shares of a stock than you own
- Who benefits from weak US dollar
- factories
- Marginal Income Tax Scale
- There are several levels at which a person can pay their income tax. The more income you get, the more levels you have to pay. Your income is divided into the levels and you pay the rate of the tax at each level with the amount of money that you earn that falls under each level.
- Income Effect on Demand
- Change in demand is brought by change in price. It makes the consumer feel richer or poorer.
- Reading a Supply and Demand Chart
- At a given price, one line shows quantity supplied while the other shows how much demand there is for a product at a given price.
- Our total national debt (9 trillion)
- Accumulative total of all deficits over the years
- Federal Reserve Chairman
- Ben Burnanke
- Effects of inflation
- Good effects: Debtors' debt is smaller. Bad effects: Savings wasted.