| A | B |
|---|
| A type of tax to alter behavior | Sin tax |
| What is the role of the IRS | Collect taxes on earnings |
| What states that those who benefit from government services should pay for them | Benefit Principle |
| What states that people should pay based on earnings | Ability to Pay Principle |
| This tax imposes the same rate on everyone | Proportional tax |
| What tax imposes a higher tax rate on those with higher earnings | Progressive tax |
| What tax imposes a higher percentage on those who earn less | Regressive tax |
| What type of tax adds a tax at each step of production | VAT or Value Added Tax |
| Who prepares the federal budget OMB | OMB or Office of Management and Budget |
| Who approves, modifies, or rejects the president's (U.S.) budget | Congress |
| Who breaks down the budget and prepares appropriation bills | House |
| Who modifies or drafts their own budget version | Senate |
| This is a bill for the House and Senate to compromise on the budget | Compromise Bill |
| When expenditures exceed revenues | Budget Deficit |
| When revenues exceed expenditures | Budget Surplus |
| What organization helps achieve price stability, full employment, and economic growth | Federal Reserve System |
| How many Fed banks are there | twelve |
| Who is the primary monetary policy arm of the Fed | Federal Open Market Committee (FOMC) |
| Who makes new bills (currency) and coins | Bureau of the Mint |
| How does the Fed influence the supply and demand of credit | Adjusts interest rates |
| This policy entails increased money supply and low interest rates | Easy money |
| This policy contracts (reduces) the money supply and drives interest rates up | Tight money |
| What is the interest rate the Fed charges on loans to other financial institutions | Discount Rate |
| What kind of rate makes borrowing expensive | High Discount Rate |
| What kind of rate encourages borrowing and stimulates the economy | Low Discount Rate |
| What is the interest rate commercial banks charge their best customers | Prime Rate |
| What principle states that the money supply has a direct effect on price levels | Quantity Theory of Money |
