Eco

What is a tax?

A mandatory financial charge imposed on individuals and corporations by a governmental entity.

What does revenue refer to?

The total amount of funds collected by a government through various means including taxation.

What is a progressive tax?

A tax system where the marginal tax rate increases as taxable income increases.

What is a proportional tax?

A tax system where the tax rate remains constant across all income levels.

What characterizes a regressive tax?

A tax structure where the effective tax burden disproportionately falls on lower-income individuals.

What is a tax base?

The total assessed value of assets or income that is subject to taxation.

What is an individual income tax?

A direct tax on personal income earned by residents or citizens.

What is a corporate income tax?

A direct tax imposed on the net profits earned by corporations.

What is property tax?

An ad valorem tax levied on the assessed value of real estate.

What is sales tax?

A consumption tax assessed as a percentage of the retail price of goods and services.

What are payroll taxes?

Taxes withheld from wages to fund federal social insurance programs.

What is a tariff?

A tax imposed on imported goods to generate revenue and protect domestic industries.

What is fiscal policy?

The use of government spending and taxation to influence the economy.

What is a federal budget?

The annual fiscal proposal prepared by the President projecting revenues and expenditures.

What is a fiscal year?

An official 12-month accounting period for budgeting and financial record-keeping.

What is an appropriations bill?

Legislation that authorizes the federal government to spend specific sums of money.

What is expansionary fiscal policy?

A policy where the government increases spending or cuts taxes to stimulate economic growth.

What is contractionary fiscal policy?

A policy where the government reduces expenditures or increases taxes to cool down the economy.

What is the multiplier effect?

The mechanism by which initial spending produces a larger increase in total national income.

What is an automatic stabilizer?

Built-in fiscal mechanisms that dampen economic fluctuations without new congressional action.

What is a budget surplus?

A fiscal state where revenues exceed total expenditures.

What is a budget deficit?

A fiscal shortfall that occurs when expenditures exceed revenues.

What is a Treasury bill (T-Bill)?

A short-term debt obligation issued by the government at a discount.

What is a Treasury note (T-Note)?

An intermediate-term government debt security that pays a fixed interest rate.

What is a Treasury bond (T-Bond)?

A long-term government debt instrument that pays semi-annual interest.

What is national debt?

The total outstanding financial obligations of the U.S. government.

What is the crowding-out effect?

The phenomenon where government borrowing raises interest rates and displaces private investment.

What is money supply?

The total volume of currency and monetary assets circulating in the economy.

What was the Federal Reserve Act of 1913?

Legislation that established the Federal Reserve System as the U.S. central bank.

What is the Board of Governors?

The primary governing body of the Federal Reserve System, consisting of seven appointed members.

What are Federal Reserve Districts?

The 12 geographic zones across the U.S. each supervised by a regional Federal Reserve Bank.

What are Member Banks?

Private banking institutions that hold stock in their district Federal Reserve Bank.

What is the Federal Open Market Committee (FOMC)?

The body within the Fed responsible for overseeing open market operations.

What is monetary policy?

Actions undertaken by the central bank to manage credit availability and interest rates.

What are reserves in banking?

Liquid funds that banks hold to settle interbank transactions and meet withdrawal demands.

What are reserve requirements?

Regulatory mandates on the minimum amount of reserves banks must hold.

What is check clearing?

The interbank settlement process for debit and credit of checks.

What is a bank holding company (BHC)?

A corporation that owns or controls one or more commercial banks.

What is the federal funds rate?

The benchmark interest rate at which banks lend reserves to each other overnight.

What is the discount rate?

The official interest rate charged by the Fed on short-term loans to banks.

What is money creation in banking?

The process where banks generate deposits by extending loans from excess reserves.

What are excess reserves?

Capital reserves above regulatory requirements available for lending.

What is the prime rate?

The baseline lending rate extended by banks to their most creditworthy borrowers.