E2 Flashcards
Inflation
The value money is decreasing so it costs more to buy goods and services
Price stability
Level of prices kept at a constant level and grows at an acceptable low rate over time
Rate of inflation
Rate at which price levels rise over time
Stable prices
No inflation
Hyperinflation
Rate of inflation so high that the value of money becomes worthless
Tax
Compulsory payment to the government
Direct tax
Tax on income/ wealth
Indirect tax
Tax on spending ( goods and services)
External cost
Negative impact of an economic transaction on a third party
Demerit goods
Good/service whose consumption is considered unhealthy due to the perceived negative effects on the consumers themselves
Income tax
Compulsory payment on wages,salaries,pensions, interests and dividends and is a progressive tax
Progressive tax
A tax that effects a persons income and if you earn a higher income, you pay a higher percentage of tax
National insurance
A compulsory progressive tax that goes towards things like benefits and pensions
Corporation tax
Tax on profit of companies
Inheritance tax
Tax on transfer of wealth at time of death
