BA1 Flashcards
Demand curve
As prices increase, demand falls
Utility
Measurement of satisfaction/enjoyment from consuming goods or services
Scare resource examples
Salary/income
Demerit goods
Merit goods
Harm the consumer / socially unacceptable
Healthcare (should be available to everyone)
Tax on capital gains
Tax on profit from disposal of assets
Indirect tax
Imposed on one section of economy but burden falls on another area
Ad valorem taxes
VAT
Excise duties
Alcohol, tobacco, vehicles
Per quantity (unit tax) or % (VAT) or both
Progressive tax
High income earner pay higher tax
Regressive tax
Higher income = less paid in tax
Proportional tax
Tax paid stays the same
In the aggregate demand and aggregate supply model, a steep fall in the price of oil would be shown as a:
A fall in the price of oil would be a supply side adjustment rather than a demand side adjustment. Aggregate supply in an economy is determined by the willingness and ability of suppliers in an economy. It is assumed aggregate supply is related to price as, other things being equal, a movement in price will affect the level of production by a supplier. A fall in price of oil would lead the aggregate supply curve to move to the right.
