AI money taxes and banking test.docx

- **Durability** - **Money must be able to withstand the physical wear and tear that comes with being used over and over again.** - **Portability** - **Money must be easily carried by people. Paper money and coins work because they are small and light.** - **Div...

- **Durability** - **Money must be able to withstand the physical wear and tear that comes with being used over and over again.** - **Portability** - **Money must be easily carried by people. Paper money and coins work because they are small and light.** - **Divisibility** - **Money must be easily divided into smaller denominations.** - **Uniformity** - **People must be able to count and measure money accurately.** - **Fungible** - **one piece of money is exactly like another** - **Acceptable** - **Everyone in an economy must be able to take the objects that serve as money and exchange them for goods and services.** - **Commodity Money:** objects that have value in and of themselves and that are also used as money - **Representative Money**: objects that have value because the holder can exchange them for something else of value - **specie**: coined money, usually gold or silver, used to back paper money - **Fiat Money**: objects that have value because a government has decreed that they are an acceptable means to pay debts - **Store of Value:** money maintains it's value over time. - **Medium of Exchange:** Money is used to buy and sell goods and services. - **Unit of Account:** measures the value of goods and services through prices. - **money supply:** all the money available in the United States economy - **liquidity:** the ability to be used, or directly converted into, cash - **mortgage**: a specific type of loan that is used to buy real estate - **fractional reserve banking**: a banking system that keeps only a fraction of its funds on hand and lends out the remainder - **Property tax:** a tax based on real estate and other property - **Sales tax:** a tax based on goods or services that are sold - **Incidence of tax:** the final burden of a tax - **Tariff:** a tax on imported goods - **Operating budget:** a budget for day-to-day spending needs - **Capital budget:** a budget for spending on major investments - **Tax:** a required payment to a local, state, or national government - **Revenue:** the income received by a government from taxes and other nontax sources - **Progressive tax:** a tax for which the percentage of income paid in taxes increases as income increases - **Proportional tax:** a tax for which the percentage of income paid in taxes remains the same at all income levels - **Regressive tax:** a tax for which the percentage of income paid in taxes decreases as income increases - **Individual income tax:** a tax based on a person's earnings - **Corporate income tax:** a tax based on a company's profits - Excise tax: a per unit tax on goods like fuel and alcohol. - Inheritance tax: a tax imposed by some states on the recipients of inherited assets - FICA - Social Security - Medicare - Property tax is the greatest source of revenue for local government - Sales tax and income tax are the greatest source of revenue for state capital budgets.