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Questions and Answers
Which payment system would likely be used for school tax?
Which payment system would likely be used for school tax?
What type of payment system is exemplified by social security?
What type of payment system is exemplified by social security?
Which example best fits an interest group payment system?
Which example best fits an interest group payment system?
Which type of payment system involves everyone benefiting from the contributions?
Which type of payment system involves everyone benefiting from the contributions?
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Which payment system involves a select group benefiting from the contributions?
Which payment system involves a select group benefiting from the contributions?
Signup and view all the answers
Signup and view all the answers
Study Notes
Fiscal Policies to Solve Problems
- Inflation can be solved by raising taxes or decreasing government spending.
- Unemployment can be solved by lowering taxes or increasing government spending.
Tax Types
- Everyone benefits taxes apply to everyone (e.g., social security).
- A group benefits taxes support specific groups (e.g., national healthcare, AARP or NRA).
- Progressive taxation: higher percentage as income rises.
- Regressive taxation: higher percentage as income decreases.
- Proportional taxation: everyone pays the same percentage.
Monetary Policy
- General idea: The Federal Reserve can address issues through monetary policy.
- Fight inflation: Take money out of people's hands.
- Combat unemployment: Put money into people's hands.
Interest Rates and Reserves
- Discount rate: The interest rate the Federal Reserve charges other banks.
- Raising the rate: Combats inflation.
- Lowering the rate: Helps address unemployment.
- Reserve ratios: The amount of money banks must keep in reserve.
- Higher reserve ratios: Curtail inflation.
- Lower reserve ratios: Can stimulate the economy.
Government Actions to Address Unemployment
- Open market committee (buying and selling bonds): Tool to influence inflation and unemployment.
- Buying securities: Can fight unemployment.
- Selling securities: Can fight inflation.
Economic Philosophies
- Keynesian economics: Belief in government spending to promote economic growth and stability.
- Supply-side economics: Belief in tax cuts and fewer regulations to drive economic growth and stability.
- Laissez-faire: Idea of limited government intervention in the economy.
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Description
Explore the fundamental concepts of fiscal and monetary policies, including tax types and their implications for inflation and unemployment. Understand how the Federal Reserve utilizes interest rates to balance economic challenges. This quiz covers essential principles related to managing an economy effectively.
