Apex Chapter 5 Economics Key Terms

World Trade Organization

An international body founded in 1995 to promote international trade and economic development by reducing tariffs and other restrictions.

tax base

Any asset that can be taxed has this.

Social Security

Any government system that provides monetary assistance to people with an inadequate or no income.

capital controls

Any measure taken by a government, central bank or other regulatory body to limit the flow of foreign capital in and out of the domestic economy.

Withholding

Any tax that is taken directly out of an individual's wages or other income before he or she receives the funds.

benefits-received principle

principle: people should pay taxes based on the benefits they receive from the government and not their income.

tax breaks

savings on a taxpayer's liability. This provides a savings through tax deductions, tax credits, tax exemptions and other incentives.

segregated

separation of an individual or group of individuals from a larger group, often in order to apply special treatment to the separated individual or group. This can also involve the separation of items from a larger group, as seen with the handling of funds in certain types of accounts.

Medicare

(in the US) A federal system of health insurance for people over 65 years of age and for certain younger people with disabilities.

Subsidy

A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction.

Fraud

A deception deliberately practiced in order to secure unfair or unlawful gain.

Misrepresentation

A false statement of fact made by one party which affects the other party's decision in agreeing to a contract.

Embargo

A government order that restricts commerce or exchange with a specified country.

Collusion

A non-competitive agreement between rivals who collaborate with each other, rival firms look to alter the price of a good to their advantage. illegal.

fiscal year

A period that a company or government uses for accounting purposes and preparing financial statements.

zoning ordinance

Written regulations and laws that define how property in specific geographic zones can be used.

Oligopoly

A situation in which a particular market is controlled by a small group of firms. there are at least two firms controlling the market.

Monopoly

A situation in which a single company or group owns all or nearly all of the market for a given type of product or service.

trade war

A situation where: Country A raises tariffs on Country B's imports in retaliation for Country B raising tarrifs on Country A's imports.

pork barrel spending

A slang term used when politicians or governments "unofficially" undertake projects that benefit a group of citizens in return for that group's support or campaign donations.

Cartel

A small group of producers of a good or service that agrees to regulate supply in an effort to control or manipulate prices.

property tax

A tax assessed on real estate by the local government. The tax is usually based on the value of the property (including the land) you own.

sales tax

A tax imposed by the government at the point of sale on retail goods and services. It is collected by the retailer and passed on to the state.

revenue tariff

A tax imposed on imported goods and services.

Tariff

A tax imposed on imported goods and services. These are used to restrict trade, as they increase the price of imported goods and services,

income tax

A tax levied by the United States Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts and other legal entities.

luxury tax

A tax placed on products or services that are deemed to be unnecessary or non-essential.

regressive tax

A tax that takes a larger percentage from low-income people than from high-income people.

Progressive tax

A tax that takes a larger percentage from the income of high-income earners than it does from low-income individuals.

General Agreement on Trade and Tariffs

A treaty created following the conclusion of World War II was implemented to reduce the barriers of international trade through the reduction of tariffs, quotas and subsidies.

no-bid contract

A type of auction process in which all bidders simultaneously submit sealed bids to the auctioneer, so that no bidder knows how much the other auction participants have bid.

government contract

Addresses the Federal Government's need to acquire goods, services (including construction), and interests in real property.

tax credit

An amount of money that a taxpayer is able to subtract from the amount of tax that they owe to the government.

price fixing

Establishing the price of a product or service, rather than allowing it to be determined naturally through free-market forces.

fiscal policy

Government policies affect tax rates, interest rates and government spending, in an effort to control the economy.

non-excludable

In economics, a good or service is said to be this when it is not possible to prevent people who have not paid for it from having access to it.

Quota

In the context of international trade, this is a limit put on the amount of a specific good that can be imported.

public revenue

Money received from the public (usually through direct and indirect taxes)

unemployment compensation programs

Money that substitutes for wages or salary, paid to recently unemployed workers under a government- or union-run program.

Bid

Offer (a certain price) for something, esp. at an auction.

payroll tax

Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee.

predatory pricing

The act of setting prices low in an attempt to eliminate the competition. This makes markets more vulnerable to a monopoly.

discretionary spending

The amount of an individual's income that is left for spending (often on luxury things), investing or saving after taxes and personal necessities have been paid.

taxable income

The amount of income that is used to calculate an individual's or a company's income tax due.

Rationing

The artificial restriction of raw materials, goods or services.

Appropriation

The claiming of land or intellectual property by a company or organization.

Risk

The danger or probability of loss to an insurer.

public expenditure

The expenditure incurred by public authorities like central, state and local governments to satisfy the collective social wants of the people

economies of scale

The increase in efficiency of production as the number of goods being produced increases.

price floor

The lowest acceptable limit as restricted by controlling parties.

price ceiling

The maximum price a seller is allowed to charge for a product or service.

private sector

The part of the economy that is not state controlled, and is run by individuals and companies for profit.

money laundering

The process of creating the appearance that large amounts of money obtained from serious crimes originated from a legitimate source.

income tax brackets

The rate at which an individual is taxed. these brackets are set based on income levels; individuals with lower income levels are taxed at a lower rate than individuals with higher income levels.

tax refund

The return of excess amounts of income tax that a taxpayer has paid to the state or federal government throughout the past year.

transfer payment

These payments are made by the U.S. Federal Government to individuals through programs such as Social Security, Welfare and Veteran's benefits.

non-rival

These types of goods allow consumption or possession to multiple users. National parks, roads and the internet are examples.

eminent domain

This power allows the government to seize land to be used in public enterprises

consumer advocacy

This practice is the use of tactics like publicity, boycotts, letter-writing campaigns, and lawsuits to counteract power of the organizations.

merit goods

a commodity which is judged that an individual or society should have on the basis of some concept of need, rather than ability and willingness to pay.

tax return

a declaration of personal income made annually to the tax authorities and used as a basis for assessing an individual's liability for taxation

market concentration

a function of the number of firms and their respective shares of the total production.

government-owned corporation

a legal entity created by a government to undertake commercial activities on behalf of an owner government. Also called a state-owned enterprise (SOE)

infant industries

a new industry. An industry, usually formed by a new product or idea, that is in the early stages of development.

Progressive

a non-ideological, pragmatic system of thought grounded in solving problems and maintaining strong values within society

freeze assets

a person cannot touch their money until their debts are paid.

Constituents

a stock or company that is part of a larger index. The collection of these make up the Index.

retaliatory tariff

a tariff imposed as a means of coercing a foreign government and intended to compel the grant and reward beneficial actions of foreign nations towards the government that issued this type of tariff.

protective tariff

a tariff imposed to protect domestic firms from import competition

capital gains tax

a tax on the profit made from the sale of an asset

Multilateral

a term in international relations that refers to multiple countries working in concert on a given issue.

competitive contract

any contract that opens a bidding process, or competition, wherein the winning entity is awarded the contract.

Bilateral

arrangement between two parties where each promises to perform an act in exchange for the other party's act.

Compliance

expenditure of time or money in conforming with government requirements such as legislation or regulation.

antitrust law

law intended to promote free competition in the market place by outlawing monopolies.

Normal Trade Relations

legal designation in the United States for free trade with a foreign nation who the United States has this type of trade relation with.

Coeducational

not segregated; designated as available to all races or groups, both sexes

ability-to-pay principle

principle: level of tax payments should be based on individuals income.

free rider

some individuals in a population either consume more than their fair share of a common resource

mandatory spending

spending on certain programs that is required by existing law.

sin tax

tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling.

excise tax

taxes paid when purchases are made on a specific good, such as gasoline. These taxes are often included in the price of the product.

labor law

the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations.

land-use law

the full range of laws and regulations that influence or affect the development and conservation of the land.

public sector

the part of an economy that consists of state-owned institutions, including nationalized industries and services provided by local authorities

Dumping

when one country exports a significant amount of goods to another country at prices much lower than in the domestic market.