Taxes should be

Simple, easy to understand and keep records of.

Efficient, easy to pay and collect without wasting time.

Certain, they should be clear when how much, and how it should be paid.

Equal, no one has to pay too little or too much.

The different types of taxes are

Excise tax, or sin tax, a tax on the sale and manufacture of goods such as gasoline or alcohol

Gift tax, a tax on something given to another person.

Import tax, or tariff, a tax on foreign goods coming into the country

Sales tax, a tax on goods

Income tax, a tax on individuals and corporations

Estate tax, a tax on some persons worth after they have died.

Property tax, a tax on property such as a car, house or boat

Taxes can be any of the following

Proportional, or flat tax, where you pay a constant percentage of your

income

Progressive, where you pay more as your income increases

Regressive, where you pay less as your income increases.

The Federal Reserve is made up of

The board of governors, which makes decisions for the Fed

12 district banks that are responsible for monitoring economic and

banking conditions in their region

4,000 banks and 25,000 other institutions.

The functions of the Fed are

To serve the government by

1. Acting as the governments banker

2. Selling, transferring, and redeeming government bonds

3. Issuing the national currency

To serve the banks by

1. Clearing checks

2. Supervising lending practices and enforcing truth-in-lending laws

To serve banks by

1. Lending banks money in a emergency

To regulate the banking system by

1. Controlling reserves

2. Examining banks to make sure they are lawful

To regulate the money supply by reducing or increasing reserve

requirements

Sole proprietorship: business owned by one person

sole = one

partnership: business owned by two or more people

partner(s) = two or more

corporation: business owned by many people and acts as a legal entity

con = together

-tion = state of

(corporation is a business owned by many people who work together and act in a state of a legal entity)

There are three different types of mergers

Horizontal – Two or more companies in the same industry merging. Ex.

Verizon and Sprint

Vertical – When two or more companies that are in similar businesses

join together. Ex. Shell and Mazda

Conglomerate – When two or more companies that are very different in

the products or services they produce join together. Ex. McDonalds and

Petsmart

Business organization are put into three different categories

Sole Proprietorships

1. Owned and operated by one person

2. Unlimited Liability

3. Has a relatively short lifespan, usually limited to that of the owner

4. Little government regulation

5. All profits go directly to the owner

6. Private funds are needed to start it, usually from the founders saving

account

Partnership

1. Owned and operated by more than one person

2. Unlimited Liability between the partners

3. Relatively short lifespan

4. Little Government regulation

5. All profits go to the owners

6. Private funds needed to start it

The last type of business organization is called a corporation

1. Owned and operated by many people

2. Limited Liability

3. Has a long lifespan

4. A great deal of government regulation

5. Profits are split up between all the members

6. It is relatively easy to obtain funds

Countries try to take advantage of each others specialties

Exports are goods sent to another county

Imports are goods taken sent by another country

A tariff is a tax on goods brought in from another country

Countries often make free trade agreements to work with one another

without tariffs

Free trade is the restriction of tariffs

A trade surplus is when a country exports more than it imports

A trade deficit is when a country imports more than it exports

Comparative advantage is when countries specialize to increase

productivity

Goods and services being supplied by someone outside the company is

called outsourcing.

There are four phases in the business cycle

Expansion, where GDP rises and unemployment falls

Peak, the height of the expansion and growth

Contraction, economic decline with falling GDP and higher

unemployment

Trough, where the economy bottoms out and won’t go any lower.

A contraction can be classified as one of the following:

Recession, a period of economic contraction of at least 6 months

Depression, a especially long and severe recession

Stagflation, a rise in inflation with a decline in real GDP

The different types of unemployment are:

Employed, actively working or temporarily on leave

Unemployed, not actively working but looking for a job

Not in labor force, where you neither have a job or are looking for one

Types of unemployment are:

Frictional, where you are taking your time finding your job

Seasonal, caused by a change in seasons

Structural, caused by a mismatch between job openings and job seekers

such as

1. New Technology

2. New Resources

3. Changes in demand

4. Globalization

5. Education, or lack thereof

Other types of unemployment are:

Cyclical, which follows the business cycle

Full employment, when there s no cyclical unemployment