The Mixed Economy of the United States

These flashcards cover key concepts related to the mixed economy of the United States, including aspects of income distribution, types of businesses, government expenditures, and taxation.

What are the two approaches to analyze income distribution?

A. Functional distribution of income and B. Personal distribution of income.

What does functional distribution of income show?

It shows the shares of income accruing to the factors of production: land (rent), capital (interest), labor (wages), and entrepreneurs (profits).

What percentage of total income do wages account for in the U.S. economy?

Wages account for 42.6% of total income.

How much income does the poorest 20% of families receive?

The poorest 20% of families receive 3.2% of total income.

What factors contribute to unequal income distribution?

1. Age 2. Unequal quantity and quality of resources 3. Unequal human capital 4. Discrimination.

What is human capital?

Investments in people that increase their productivity and pay, such as education, training, healthcare, migration, and job search.

What proportion of household spending goes to services and goods?

66% of income goes to services and 34% to goods.

What are durable goods?

Durable goods have an expected life of more than three years, such as computers and cars.

What is a sole proprietorship?

A business owned by one individual, which is simple to set up but has unlimited liability.

What are the characteristics of a corporation?

Corporations have multiple owners, are legal entities, offer limited liability, have perpetual existence, and can easily raise financial capital.

What are the types of government expenditures?

A. Government purchases (spending on goods and services) and B. Transfer payments (payments to individuals without contribution to current output).

What is the benefits-received principle of taxation?

Taxes should be in proportion to the benefits received from government expenditures.

What is a progressive tax?

A tax where the average tax rate increases as income increases.

Give an example of a regressive tax.

Sales tax or excise taxes.

What percentage of federal taxes come from personal income taxes?

47% of federal taxes come from personal income taxes.