Chapter 9 & 12 Microeconomics Flashcards Preview

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Flashcards in Chapter 9 & 12 Microeconomics Deck (20):
1

Vertical Equity

Rich people should pay more taxes

2

World Price

Price of goods in the world market

3

Horizontal Equity

Tax payers with similar income levels should pay the same amount of tax

4

Tarif

Tax on a good produced abroad and then sold domestically

5

What are the 4 benefits of trade

More goods to choose from
More Competition
More Ideas
Cost is lowered through economics of scale

6

What is an example of a Tarif?

If Toyota cars are Japanese made cars that are sold in the US, then the US taxes them

7

Economics of Scale

Cost is lowered when goods are produced in large quantities

8

Ability to Pay Principle

Taxing people based on them being rich or poor

9

Progressive Tax

High income tax payers, pay a larger amount of their income

10

Marginal Tax Rate

the amount taxes increase from an additional dollar of income

11

What are the 2 largest sources of tax revenue for the United States?

Individual Income Tax
Payroll Tax

12

Domestic Price

the price of a good that is sold and produced in the same country

13

Average Tax Rate Formula

Total Tax
----------- x 100
Total Income

14

Which tax system best describes the U.S. federal tax system?

Progressive Tax

15

Lump-some Tax

Tax that is the same for anyone

16

Proportional Tax

All tax payers pay the same fraction of income

17

What is an example of Proportional Tax?

If the tax rate is 40% everyone gets taxed at the same rate
-income = 100
- tax paid $40
- then income = 1000
-tax = $400

18

Benefit Principle

The idea that people should pay taxes based on the benefits they receive

19

What is an example of a benefits principle?

Money gotten from gasoline tax should be used to fix roads
People that buy gasoline are the people who use roads

20

Regressive Tax

High income tax payers pay smaller fraction of income then lower income tax payers

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