POSI

Wealth of Nations

A book written by Adam Smith in 1776 defending free market capitalism.

GDP (Gross Domestic Product)

A measure of the economy that represents the total monetary value of all goods and services produced in a country.

Business Cycle

The fluctuation of economic activity characterized by periods of prosperity, recession, and recovery.

General Theory

A work by John M. Keynes published in 1936, advocating for government intervention to manage aggregate consumer demand.

Inflation

A general increase in prices and fall in the purchasing value of money, often caused by increased demand or reduced supply.

16th Amendment

Ratified in 1913, it permits the federal income tax on personal and business incomes.

Payroll Tax

A tax imposed on employees' wages to fund social security and Medicare.

Sales Tax

A consumption tax imposed by the government on the sale of goods and services, which in Texas is a primary revenue source.

Federal Reserve Board

The central banking system of the United States, responsible for setting monetary policy including interest rates.

Tax Cuts and Jobs Act (TCJA) of 2017

Legislation that reduced taxes primarily benefiting upper-income groups.

Monetary Policy

The process by which the Federal Reserve manages the money supply and interest rates to influence the economy.

Bond Issues

Securities issued by governments or corporations to raise funds, typically offering lower interest rates in strong economies.

Budget Surplus

When government revenue exceeds its expenditures in a given period.

CARES Act of 2020

Legislation that allocated $2 trillion to stimulate the economy during the COVID-19 pandemic.

Regulation

Government intervention in markets to correct problems or reduce risks, including setting prices and ensuring standards.

Public Goods

Goods that are provided by the government and available for use by all, such as defense and clean environments.

Consumer Financial Protection Bureau

An agency created in response to the 2008 Financial Crisis to oversee and enforce consumer financial protection laws.

The state government of Texas gets its money from

Sales Tax

Aggregate demand increases with

tax cuts, gov’t spending, interest rate cuts.

In 2020, supply chains were

disrupted because of the pandemic.

Everyone who works pays

the payroll tax. All pay the same 15.2% rate.

The income tax

is progressive and rich pay higher rates.

Mandatory spending

is social security

TCJA of 2017

cut taxes primarily on rich.

The Fed chair

is Jerome Powell- he is a leading policy maker.

Reducing interest rates

makes it easier to borrow and GDP should grow.

Texas does not have an income tax but

depends on the sales tax on consumer purchases

Local governments depends

on the tax on real estate or property

The Tax Cuts and Jobs Act of 2017

reduced taxes on upper income groups

Tax exemptions like deductions

help a taxpayer reduce her tax liability

The payroll

is a single flat rate all earners pay.

Bond issues with healthy economies can

offer lower interest rates

Budget surpluses

government revenue exceeds spending

CARES Act of 2020

put $2 trillion into the economy

The debt limit is

$31 trillion.

The purpose of regulation is to

correct problems or reduce risks in modern life.

The Texas Railroad Commission was created in

1891 and set prices. It regulations oil wells now.

The federal government relies mostly

on payroll and income taxes

Local governments like schools, counties, and cities rely on

property taxes

Federal spending on health and old age has

grown at the expense of military spendingTexas has

Texas has

biannual budgets and budget surpluses. It will pass a two-year budget in this session.

Regulation corrects

market problems like imperfect information and oligopoly.

Regulation can be

structural or social.

Public good are provided by

government

Defense and a clean environment are examples of

public goods

The 2008 Consumer Financial Protection Board was created in response to

created in response tol Crisis.