Fiscal Policy Flashcards
Define ‘equality’ in relation to income
Each member of society receives exactly the same income.
Define ‘poverty’
An inability to satisfy minimal consumption needs.
Define ‘absolute poverty’
An income level which falls below the poverty line, an income level considered minimally sufficient to sustain a family.
Define ‘relative poverty’
Compares the income of individuals in society with median incomes.
List negative consequences of poverty
- Low living standards
- Lack of access to education and healthcare
- Higher infant, child and maternal mortality
- Higher levels of preventable diseases
- Social problems
- Inability to realise one’s full potential
Define ‘transfer payments’
Payments made by the government to individuals specifically for the purpose of redistributing income away from certain groups and toward other groups.
Who is included in vulnerable groups?
- Older people
- Sick people
- Very poor people
- Children of poor families
- Unemployed people
ETC
Define ‘merit goods’
Goods that are beneficial for consumers, often with positive consumption externalities, that are underprovided by the market and underconsumed.
What are direct taxes?
- Personal income taxes
- Corporate income taxes
- Wealth taxes
- Social insurance taxes
What are indirect taxes?
- General expenditure taxes or sales taxes (tax ultimately paid in full by consumers)
- Excise taxes specific goods and services (tax burden split between consumer and producer)
- Customs duties (tariffs)
Average tax of income tax
Total marginal tax
_______________ x 100
Annual income
What are sources of government revenue?
- Sale of government owned enterprises or property
- Sale of goods and services
- Taxes of all types
What are types of government expenditure?
- Current expenditures
- Capital expenditures
- Transfer payments
What is budget deficit?
Relationship between government expenditures and tax revenues over a time period.
What is government debt?
Accumulation of deficits minus any surpluses over time.
