Application of Demand and Supply Part 2 Flashcards
refers to an asset or item that is purchased with the hope that it will generate income or appreciate in the future
Investments
Entrepreneurs and capital owners need the return on their investment, covering risk, and earning a reward.
Expected return on the investment
This considerably influences the investment decisions of entrepreneurs.
Business confidence
Investment appraisals and eventual business decision-making are influenced by expectations such as an economic downturn
General future expectations
This reduction is an incentive to invest.
Corporation tax
Corporate and household savings offer a flow of funds into the financial sector, which are available for investment.
Level of savings
Small changes in household income can trigger changes in investments.
Changes in household income
There is an increase in the production level when the gross domestic product (GDP) is high
Level of economic activity
The demand for capital increases to keep up with developments.
Technological change
The demand for capital can significantly be affected by _______ granting incentives to firms
Public policy
the cost of using or borrowing money
Interest rates
These are the amount of money given by a lender to a borrower.
Loanable funds
Interest is the return earned by the capital as the input in the production process.
Return on capital
For investors that are risk averse, these are generally safe investment options, providing fixed periodic sources of income over a certain period
Fixed-income investments (FIIs)
There is no full guarantee for returns strongly influenced by the financial markets’ behavior and economic situations.
Variable-income investments (VIIs)
refers to the payment for using land and other natural or economic resources in fixed supply.
Rent
the positive difference between the actual payment made to the owner for an economic resource for its exclusivity or scarcity and the owner’s expected payment level
Economic rent
There can be consequences on the labor market and businesses when the mandated minimum wage rate is higher than the free market wage rate.
Minimum wage
the act of levying a tax so that the sovereign, through its law-making body, can raise income to cover the necessary expenses of the government.
Taxation
taxes levied by the government on income and wealth from households and businesses to raise government revenue and act as a fiscal policy instrument.
Direct taxes
a tax on all yearly profits arising from property, profession, trades, or offices or as a tax on a person’s income
Income tax
taxes levied by the government on products and services to raise revenue and to act as an instrument of fiscal policy
Indirect taxes
business tax imposed and collected from the seller in the course of trade or business on every sale of properties
Value-added tax
a tax on the production, sale, or consumption of a commodity in a country.
Excise tax
tax imposed so that the tax rate is fixed, with no change as the taxable base amount increases or decreases.
proportional tax
tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.
regressive tax
tax in which the tax rate increases as the taxable base amount increases.
progressive tax
There is a collected 12% for almost all kinds of product sales, services, and leases, remitted to the Bureau of Internal Revenue (BIR) quarterly or monthly in this type of tax
Value-added tax (VAT)
Withholding taxes on compensation refers to the tax withheld from income payments to individuals arising from an employer-employee relationship
Salary and wage taxes
Movie houses, basketball games, carnivals, amusement businesses, and even concerts of singers and actors are subject to such taxes by the local and national governments.
Amusement taxes
Businesses such as manufacturers of alcohol, tobacco, and petroleum products, importers of automobiles or jewelry, and those involved in mining must pay such taxes.
Excise taxes
Businesses pay customs duties for importing products as part of their raw materials and certain industrial machinery and equipment.
Import taxes
If your business is a sole proprietorship or a partnership, your income as the proprietor or partner is considered ‘personal income.’
Individual income taxes
A corporation is considered a separate tax-paying entity, paying its income taxes.
Corporate income taxes
It is a tax levied by the local government on properties
Real property tax
______ tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to testamentary disposition
Estate and Inheritance taxes
The tax burden on an average worker is up to 35% depending on his or her income range
Some effects of high taxes on businesses
