Chapter 6 - Funding The Public Sector

Question 0

limit on government spending and transfer payments

Answer 0

government budget constraint

Question 1

three sources of government funding

Answer 1

fees for gov services, taxes, borrowing

Question 2

the value of goods, services, wealth, or incomes subject to taxation

Answer 2

tax base

Question 3

the proportion of a tax base that must be paid to a government as taxes

Answer 3

tax rate

Question 4

change in the tax payment divided by the change in income

Answer 4

marginal tax rate

Question 5

marginal tax rate formula

Answer 5

= change in taxes due / change in tax income?

Question 6

a specified interval of income to which a specific and unique marginal tax rate is applied

Answer 6

tax bracket

Question 7

total tax payment divided by total income

Answer 7

average tax rate

Question 8

tax system in which the tax bill comprises exactly the same proportion no matter a person’s income

Answer 8

proportional taxation

Question 9

tax system where higher percent of income tax is paid based on income

Answer 9

progressive tax

Question 10

a tax system in which as more dollars are earned, the percentage of tax paid on them falls

Answer 10

regressive taxation

Question 11

positive difference between the purchase price and the sale price of an asset

Answer 11

capital gain

Question 12

negative difference between the purchase price and the sale price of an asset

Answer 12

capital loss

Question 13

corporation pays taxes on its profits and dividend income is taxed. this is called blank

Answer 13

double taxation

Question 14

earnings that a corporation saves, or retains, for investment in other productive activities and earnings that are not distributed to stockholders

Answer 14

retained earnings

Question 15

the distribution of tax burdens among various groups in society

Answer 15

tax incidence

Question 16

tax incidence is distributed among these three things

Answer 16

consumers, stockholders, employees

Question 17

taxes assessed on the prices paid on a large set of goods and services

Answer 17

sales tax

Question 18

assessing taxes by charging a tax rate equal to a fraction of the market price of each unit purchased

Answer 18

ad valorem taxation

Question 19

based on the assumption that changes in the tax rate leave the tax base unaffected

Answer 19

static tax analysis

Question 20

recognizes that higher tax rates may shrink the tax base

Answer 20

dynamic tax analysis

Question 21

a tax levied on purchases of a particular good or service

Answer 21

excise tax

Question 22

a constant tax assessed on each unit of a good that consumers purchase

Answer 22

unit tax