Government and the Economy Test Prep

What type of congressional power allows the power to tax?
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Terms in this set (26)
What type of congressional power allows the power to tax?
Expressed Powers
Purpose of Income Tax
Tax placed on the income of an individual or corporation
What type of tax is income tax?
progressive tax
Purpose of Social Insurance Taxes
Payroll taxes: Social Security, Medicare, and Unemployment Compensation
What is the largest Source of Tax revenue of the states governments?
Sales Tax
benefits that must be paid to all of those who meet the eligibility requirements of the social programs created by Congress are?
Entitlement programs by Congress
Federal Budget check and balance for the budget
Prepared by the President and his Office of Management and Budget, congress reviews the budgets and make changes if needed, once changed and accepted the budget returns to the president for their approval.
What type of money in the Federal Budget is Controllable and accounts for 20% of the budget?
Discretionary
What type of money in the Federal Budget is not Controllable and accounts for 80% of the budget?
Mandatory
Central Band of the United States
The Federal Reserve
Why is the federal reserve considered decentralized?It is split into 12 Regional Reserve Banksthe highest level of employment the economy can sustain without generating unwelcome inflation.Maximum Employmentcrucial to the U.S. economy because it provides confidence to consumers that the price of goods and services will remain relatively constant for a long duration of timePrice Stabilityworks to make sure that the Payments System is safe, secure, and efficient in order to allow the U.S. economy to function as productively as possible.Overseeing the Payment SystemThe Federal Reserve works to supervise banks in order to make sure that financial institutions are following U.S. banking laws and conducting their activities in a fiscally sound mannerSupervising and Regulating BanksThe Federal Reserve crafts its monetary policy to influence the money supply in the U.S. economy through various toolsSetting monetary policyWhy was the Federal Reserve created to be an independent Agency?To avoid Political PressureHow does the fractional reserve banking work?Banks retain a fraction of the money deposited. They keep 10%for on-demand withdrawal, the other 90% go toward consumer loansA rise in the general level of prices of goods and services within the an economyInflationWhen the price of goods and services drops, and continues to drop, within an economy. If dropped to much, it could lead to a depressionDeflationSlows the rate of rising prices for goods and services in an economyDisinflationHow does the Federal Reserve affect interest rates?They place monetary policies to influence the amount of money banks can lendinterest rate set by the Federal Reserve's Board of Governors on short-term (overnight) loans offered to depository institutions by the Federal Reserve.Federal Discount RateThe interest rate set by the Federal Reserve's Federal Open Market Committee on short-term (overnight) loans offered by one depository institution to another depository institution to meet its reserve requirements.Federal Funds RateThe main process through which the Federal Reserve's FOMC effects the money supply in the U.S. economyOpen Market OperationsHow do the federal reserve enforce federal banking laws?They conduct examinations to make sure that banks and other financial institutions are complying with banking law