Econ test 4 & 5

Ability to pay principal of taxation

Taxes should be paid according to levels of income – regardless of benefits

Balanced budget

Annual financial plan where expenditures equals revenues

Barter Economy

An economic system dependent on the exchange of goods rather than credit card or cash transactions, where traders dismiss the idea of using a means of exchange as an unnecessary complication.

Benefit principal of taxation

Taxes should be paid according to benefits received regardless of income

Collusion

Agreements among producers to fix prices, limit output, or divide markets – usually illegal

Collateral

Property or other security used to guarantee repayment of a loan

Certificate of Deposit

Receipt showing that an investor has made an interest bearing loan to a financial institution

Copyright

Exclusive right of authors or artists to publish, sell or reproduce their work for their lifetime plus 50 years

Currency

Paper component of the money supply, today consisting of Federal Reserve notes

Comparable Worth

A concept that jobs held by women and men should be compensated equally if they require similar skills, effort, responsibility, and working conditions (e.g., lumberjacks/freeway workers = to nurses for pay)

Deficit Spending

Annual Government spending in excess of taxes and other revenue

Equilibrium wage rate

The wage rate at which the quantity of labor supplied by workers equals the quantity of labor demanded by employers in a labor market.

Entitlement

Program or benefit using established eligibility requirements to provide health, nutritional, or income supplements to individuals

Federal Reserve System

Privately owned, Publicly controlled, central bank of the United States

Federal Budget Deficit

Excess of national expenditures over tax and revenue collections

FDIC

Federal Deposit Insurance Corporation (Up to $250,000); Prevents “runs on the banks” from happening

FICA

Federal Insurance Contributions Act – tax levied on employers and employees to support social security and MEDICARE (Federal health care program for senior citizens, regardless of income)

Fiscal year

12 month financial planning period that may not coincide with the calendar year

Gross Domestic Product

Dollar value of all final goods, services, and structures produced within a country’s national borders during a one year period

Gross National Product

Total dollar value of all final goods, services, and structures produced in one year with labor and property supplied by a country’s residents, regardless of where the production takes place; largest measure of a nation’s income

Glass Ceiling

The social barrier preventing women and minorities from being promoted to top jobs in management.

Geographic Monopoly

Market situation where a single producer controls the market based on its location

Gift Tax

Tax on the donations of money or wealth that is paid by the donor

IRA

Individual Retirement Account (Tax Exempt – Income not subject to tax by Federal or State Governments)

IRS

Internal Revenue Service; part of the U.S. Department of the Treasury responsible for enforcing and administering federal tax laws, processing tax returns, performing audits, and offering assistance for American taxpayers.

Legal Tender

Fiat currency that must be accepted for payment by decree of Government

Liquidity

How easily an asset can be converted into cash without affecting its market value.

Maturity

Life of a bond or length of time funds are borrowed

Medicare

Federal health care program for senior citizens, regardless of income

Medicaid

Joint Federal-State medical insurance program for low-income people

Medium of Exchange

Money or other substance generally accepted in an exchange

Monetary Unit

The standard unit of value of the currency of a country.

Monopoly

Market structure characterized by a single producer (imperfect competition)

Mutual Fund

Company that sells stock in itself and uses the proceeds to buy stocks and bonds issued by other companies

Negative Externality

Harm, cost or inconvenience suffered by a third party because of actions by others

Patent

Exclusive right to manufacture, use, or sell any new and useful invention for a specific period

Property tax

A tax primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment.

Price war

Series of price cuts that result in unusually low prices

Price fixing

Agreement by firms to charge a uniform price for a product- form of collusion

Price discrimination

Illegal practice of charging customers different prices for the same product

Private Sector

Part of the economy made up of individuals and businesses

Public Sector

Part of the economy made up of local, state, and federal governments

Public disclosure

Requirement forcing a business to reveal information about its products or its operations to the public

Progressive tax

Percentage of income paid in taxes rises as level of income rises

Sin tax

High tax designed to raise revenue and discourage consumption of a socially undesirable product

Sales tax

General state or city tax levied on a product when it is sold

Surcharge

Additional tax added to other charges already in place

Technological Monopoly

Market situation where a single firm controls the market because of a manufacturing method, process, or other scientific advance

Tax loophole

Exception or oversight in the tax law allowing taxpayer to avoid taxes

Treasury Bill

Short term U.S. Govt obligation with a maturity of one year or under in denominations of $1,000

User fee

Tax paid for the use of a good or service – benefit tax

Wage rate

The amount of base wage paid to a worker per unit of time (as per hour or day) or per unit of output if on piecework.