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Economic Test Unit 3
it's so preppy in here!
| Question | Answer |
|---|---|
| Who protects labor? ____and_____. | Unions; Government |
| The law that prevents wage and salary discrimination is the_____. | Equal Pay Act of 1963 |
| Which category of labor earns the lowest wage? highest? | unskilled; professional |
| What do traditional theorist believe about wage? | supply and demand determines wage |
| Those in favor of minimum wage believe it is necessary to provide_____. | economic equity |
| What percentage of the U.S. labor force is currently unionized? | 11% |
| Labor unions are most common today in what type of profession? | government workers |
| When was the minimum wage started?____ what was it?____ what law set it?____ what is the current minimum wage?____ can states have lower minimum wages?____ higher?____ | 1938; 25 cents; Fair Labor Standard Act; $7.25; no; yes |
| Which people are not counted in the labor force? | under 16, members or military, institutionalized, retirees, students, people who choose not to work |
| Explain each type of unemployment: | frictional- between jobs seasonal- demand changes with the seasons structural- skills not needed anymore cyclical- swing in business cycle |
| Who figures the unemployment rate?____ how often? what % is full employment?___ | Bureau of Labor; monthly; 4.5% |
| How is the unemployment rate calculated? | #unemployed divided by # in the civilian labor force x 100 |
| Decisions the government makes about taxing, borrowing. spending are known as____. | Fiscal Policy |
| Explain the two principles of taxation: | Benefit Principle- those who benefit from government services should pay taxes Ability to Pay Principle- pay by ability not based on benefits received. |
| What type of tax is considered income tax in the U.S? | progressive |
| Why sales tax is considered a regressive tax? | taxed at a higher % of your income the lower your income |
| What are the 3 largest resources of revenue for the federal government?______ state governments?________ local governments?______ | individual and corporate income tax, FICA; intergovernmental revenue and sales tax; intergovernmental revenue and property tax |
| A special tax on luxury items is known as an___ tax. | excise |
| FICA taxes are used to support_____ and _______. | Social security; Medicare |
| What are the 3 highest federal government expenditures in order? | entitlements; national defense; interests |
| A government expenditure in which the government receives something in return is a____ whereas an expenditure in which the government receives nothing in return is a_____. | goods & services; transfer payment |
| Give examples of entitlement payments? | social spendings, social security; disability, Medicare, food stamps |
| When the government spends more than it collects in revenue there is a budget____, yet when it collects more than it spends we have a budget ____. | deficit; surplus |
| When the federal government does not have enough revenue for spending it is forced to borrow money, causing a___. | debt |
| What are the effects of increased taxes? | budget surplus, reduced money for households and businesses spending, slow down in economy |
| What are the effects of spending decrease by the federal government? | tax goes up, employment and production increase, budget deficit |
| What are the effects of increased government borrowing? | interest rates go up, decrease funds available for households and businesses borrowing |
| How much is the current national debt? | 39 trillion |
| Keynesian economics is aimed at influencing the economy by changing aggregate___, whereas Reaganomics is aimed at influencing the economy by changing aggregate___. | demand; supply |
| Keynesian economists believe to pull out of a recession the government should____. | increase spending; decrease taxes |
| Demand-side policies that are more effective at increasing demand quickly are_____. | automatic stabilizers |
| Those who favor supply-side policies believe to expand the economy the government should____ and____. | be less involved; offer tax cuts |
| Reaganomics aims to expand the economy by giving tax breaks to top income earners and businesses, thus it is sometimes referred to as ___. | trickled down economics |
| What economist is attributed to Keynesian economics?___, when were they most popular?_____ | Keynes; 1930s-70s |
| The theory that inflation is caused by all sectors of the economy trying to buy more than the economy can produce is called____. | demand-pull- theory |
| An economist who believes the increase in production costs causes inflation is using___ theory. | cost-push |
| What are the effects of inflation? | reduces value of your money, high interest rates, purchasing goes down, employment goes down |
| Which are characteristics of each phase of the business cycle? | Recession- 2 consecutive quarters of decline in GDP; output up unemployment up Trough- severe recession, depression; low production, high unemployment Expansion-GDP increase production up; unemployment down Peak- period of prosperity; prod.& employ. up |
| What is the definition of a recession? | 2 consecutive quarters of decline in GDP |
| What economic indicator measures inflation? | consumer price index |
| What type of inflation has the U.S. experiences over the last 30 years? | creeping inflation |
| Explain the causes of a change in the business cycle? | Change in capital expenditures- business cut back on inventory Inventory adjustment- businesses cut back on inventory at signs of slow down |
| Explain the causes of a change in the business cycle? | External shock- change in oil prices, war, disasters, conflict Innovation and Imitation- new product or new method Easy money policy- feds increase the money supply |
Created by:
CheyenneW