Economics Test 5

Stability

a stable government will result in a stable and successful economy

Ponzi Scheme

dishonest investments looking for easy money (Charles Ponzi)

Socialism

economic system based on collective ownership and control of national resources

Excessive Taxation

Less money available for businesses and households

Inflation and Debasement of Money

leads to increase in prices and higher interest rates for loans

Excessive Regulation

too much regulation discourages current and future business owners from succeeding

Direct Tax

paid directly to the government (example Property/Income)

Indirect Taxes

taxes for which the responsibility for payment can be passed on to someone else

Progressive Tax System

wealthy pay taxes at a higher tax rate than lower income people

Flat Tax

everyone pays the same percentage of taxes regardless of income earned

Regressive Tax

people with a low income pay the highest percentage of taxes while the rich pay a smaller percentage but an equal amount

FICA Tax

funds Social Security and Medicare programs

Original

the government would stay in everything that is public

Current

the government is involved in the public and private sector

Deficit Spending

spending more each year than is brought in through revenue

National Debt

total amount owed

New Deal

created by FDR during the Great Depression

Keynesianism

the government should “prime the economic pump” and put money into the economy

TFP

output per unit of all production units

Sole Proprietorship

simplest form of business organization; has 1 owner

Partnership

2 or more owners

Corporation

legal construct owned by shareholders

LLC

combines a partnership and a corporation

Business Cycle

changes in levels of economic activity over time

GDP

value of all finished goods and services produced within a country during a year’s time

GNP

vale of finished goods and services produced by a nation’s citizens during a year’s time

Peak

the highest point of the expansion

Recession

period of economic decline; GDP is low for 2 months or longer

Trough

the lowest point

Depression

an especially severe recession

Demand-pull Inflation

demand becomes greater than supply resulting in shortages

Cost-push Inflation

production cost increases, so product price increases

CPI

the most used tool to measure inflation

Base Period

time period that has been chosen when the prices of goods are set to 100%, currently 1982-1984 (CPI is compared to the base period)

Stagflation

High levels of inflation combined with high unemployment (results in stagnancy of production)

Supply-side Economics

cutting taxes to make more money available for savings, R&D, hiring new employees, etc.

SSE

implemented by Ronald Reagan

1982-1984

What time period was chosen when the prices of goods are set to 100%

Ronald Reagan

Who implemented SSE

Budget

a spending plan that ensures you can pay for the things you need

Balanced Budget

income equals expenses

Will

how an estate is to be divided among people or organization

Living Will

directs a healthcare professional what to do should a person become incapacitated

Health Care Power of Attorney

makes health care decisions for an individual if the person becomes incapacitated and is not able to make a decision for themselves

Financial Power of Attorney

gives someone else the right to make financial decisions for a person and control hsi finances when he can’t for himself

Nationalism

promoting and supporting a nation regardless of moral or ethical code

Communism

an economic system based on the government control of production, distribution, and consumption of goods

Karl Marx

Founder of Communism

Bourgeois

middle class capitalists

Proletariat

the poor working class

Class struggle

History is a _______ between the middle class and the poor working class

Utopia

a world in which all goods, money, and labor will be shared equally among the people; a perfect society

Bolshevik Revolution

first communist revolution in history (1917); led by Vladimir Lenin

Alexander Solzhenitsyn

famous writer who was ap prisoner of communist Russia

Inefficiency

goods, jobs, and general economic functions do not work properly resulting in shortages

No Market Signals

scarcity and waste results when the government ignores people’s needs/wants

Bad Management

government and business officials are under qualified or not motivated to succeed

Ineffective Reforms

attempted changes to a weak economy, usually creating more problems (Ex. Five-Year Plan of the Soviet Union)

Socialism

an economic system based on government ownership and control of resources

Universal Healthcare

Results in no incentive for doctors, understaffed, underfunded, power quality care

The Communist Manifesto

What book did Karl Marx write

Condition

What did Marx advocate for equality of

Vladimir Lenin

Who led the Bolshevik Revolution

Communist East Germany and Free West Germany

What 2 countries was Germany divided into

Berlin

What is Germany’s capital

Communist East Berlin and Free West Berlin

What was Berlin divided into

Sweden

What country gives more government aid, more government regulation