Financing the Government

Discretionary Spending

Federal spending on programs that are controlled through the regular budget process

World Bank

a United Nations agency created to assist developing nations by loans guaranteed by member governments

IMF

a United Nations agency to promote trade by increasing the exchange stability of the major currencies, International Monetary Fund

Entitlements

a claim for government funds that cannot be abridged without violating the rights of the claimant; for example, social security benefits or payments on a contract

NAFTA

a trade agreement between Canada, the United States and Mexico that encourages free trade between these North American countries.

Social Security

1935, guaranteed retirement payments for enrolled workers beginning at age 65

Medicare

A federal program of health insurance for persons 65 years of age and older

Medicaid

A health care payment program sponsored by federal & state governments

Estate tax

A tax on the estate, or total value of the money and property, of a person who has died

Holders of the US debt

China

Excise tax

Consumer tax on a specific kind of merchandise, such as tobacco

Uncontrollable Costs

Costs that cannot be changed or influenced in the short run by management

Welfare/Food stamps

Government aid to the poor

GDP

Gross Domestic Product

American Trade Partners

Japan, Canada, Mexico, and China

Unemployment

Number of civilians at least 16 years who have been trying to find a job within the prior four weeks

OASDI

Old Age Survivors and Disability Insurance

Problems/benefits of globalization

Problems: evenly highly educated people can be manipulated by demagogic leaders who play on their fears and prejudice

Mandatory spending

Required govt spending by permanent laws

Income tax

Tax paid to the state, federal, and local governments based on income earned over the past year

Customs duties

Taxes on goods brought into the country for sale; also called tariffs

WTO

The World Trade Organization - an international body that enforces agreements that reduce barriers to international trade

Trade embargo

a government order imposing a trade barrier

Fiscal Policy

a government policy for dealing with the budget (especially with taxation and borrowing)

Tariff

a government tax on imports or exports

Import quota

a limit on the amount of a good that can be imported

Regressive tax

a tax for which the percentage of income paid in taxes decreases as income increases, hurts poor more than rich

Progressive tax

a tax for which the percentage of income paid in taxes increases as income increases

Gift tax

a tax imposed on transfers of property by gift during the lifetime of the giver, if more than 13000 will be taxed

Individual Income Tax

a tax on a person's earnings

Supply-side economics

advocated by President Reagan, holding that too much income goes to taxes and too little money is available for purchasing. The solution is to cut taxes and return purchasing power to consumers.

Agricultural economy

agricultural economy or an economy in which people meet most of their needs by farming

Public debt

all of the money borrowed by the government and not yet repaid

Money Supply

all the money available in the United States economy

Revenue

an increase in owner's equity resulting from the operation of a business

European Union

an international organization of European countries formed after World War II to reduce trade barriers and increase cooperation among its members

Power to Borrow

article 1, section 8, clause 2 gives congress the power " to borrow money on the credit of the united states

Federal Reserve

central banking system of the US

Controllable Costs

costs that can be influenced or changed by management

Corporation income tax

each corporation mush pay a tax on its net income- that is, on all of its earnings above the cost of doing business

Protectionism

economic policy of shielding an economy from imports

Manufacturing economy

economy in which a large portion of employees are engaged in work that is aimed at producing manufactured products

Purposes of taxation

generate Revenue

Exports

goods and Services sold to other countries

Imports

goods produced abroad and sold domestically

Monetary Policy

government policy that attempts to manage the economy by controlling the money supply and thus interest rates.

Luxury taxes

levied on the sale of luxury goods

Payroll tax

tax on wages and salaries to finance Social Security and Medicare costs

Demand-side economics

the idea that government spending and tax cuts help an economy by raising demand

Power to Tax

the national government's power to tax the people for revenue

Keynesian economics and the Great Depression

the use of government spending and taxing to help stabilize the economy

Purposes of Trade

to earn money and receive resources that you do not have in your nation

Service Economy

where the majority of people earn their living by providing a service rather than manufacturing a product

Surplus

you bring more money in than you owe

Deficit

you owe more money than you bring in