Shared Flashcard Set

Details

NCSU EC 410 Final Review - 2
Part 2
25
Finance
Undergraduate 1
05/09/2011

Additional Finance Flashcards

 


 

Cards

Term
Options for reforming SS
Definition
increase retirement age, increase payroll taxes to yield at least 2%, privatization
Term
Medicare
Definition
subsidizes insurance premium, financed through payroll taxes and fees
Term
Tax Base
Definition
Item or activity to be taxed, Can be wealth, income or consumption
Term
general tax
Definition
tax of all economic base with no exclusions, etc
Term
selective tax
Definition
taxes only a proportion of the tax base
Term
Unit tax
Definition
Tax per unit sold
Term
Ad valorem tax
Definition
tax on a percentage of the value of an item
Term
Proportional Tax rate structure
Definition
tax rate does not vary with size of base. MTR = ATR
Term
Progressive tax rate structure
Definition
tax rate increases with size of base. MTR eventually exceeds ATR.
Term
Regressive Tax Rate Structure
Definition
tax rate decreases with size of base. MTR eventually declines below ATR.
Term
Individual excess of burden
Definition
the loss in well-being to a tax-payer caused by the sub. Effect of a price-distorting tax.
Term
Total Excess of burden
Definition
the loss in net benefits from resources use caused by the sub. Effects of a tax. Also called “dead weight loss of a tax” over and above the value of the taxes collected
Term
Tax incidence
Definition
measures the distribution of the burden of paying a tax. The more inelastic the supply , the greater share of tax burden on the sellers, and vise versa
Term
Benefit Principle of Taxation
Definition
taxes should vary w. benefit from gov services
Term
The ability to pay principle
Definition
taxes should vary based on ability to pay and minimize sacrifices from paying taxes.
Term
Lump sum transfer
Definition
A lump-sum subsidy is a payment made by government to individuals independent of the recipients income, consumption or wealth. No sub. effect
Term
Pure Private good
Definition
Excludable, can be used up, no externalities, market demand found by adding up indiv. demands horizontally
Term
Pure Public Good
Definition
Demand found by adding up indiv. demands vertically, only pos externalities
Term
The Bowen Model
Definition
Equal tax shares, convex preferences, variation in most preferred outcomes among voters: t=AC/n
Term
Political Externalities
Definition
losses in well being that occur when voters do not obtain their most preferred outcomes
Term
Under unanimous consent
Definition
political externalities are zero
Term
Political transaction costs
Definition
the value of time, effort, and other resources expended to reach a collective choices. These increase with the percent of the voting population required to pass a proposal
Term
Equation for the effect on wages caused by taxes and elasticities
Definition
W = (1/2) * t^2 * (Pstar*Qstar) * ((Es * Ed)/(Es - Ed))
Term
optimal tax theory
Definition
minimize the total excess burden of taxation by taking into account multimarket effects of general taxation
Term
Budget deficit
Definition
Increases interest rates, must be planned to be paid off in the future, about half owned by foreigners
Supporting users have an ad free experience!