How governments intervene Flashcards
Definition of ‘indirect taxation’
imposed by a government on goods and services
Definition of ‘Subsidies’
money granted by the government
Price controls
Government setting minimum and maximum prices for goods and services
Regulations
Imposition of rules by government
Public expenditure
spending made by the government of a country on collective needs and wants such as pensions
Direct taxation
tax aimed at you, e.g income tax
State provision
prevent the under-provision and under-consumption
‘Income tax’ definition
Progressive tax, more you earn the more you pay
‘Prohabitation’ definition
Certain things that can be made illegal, e.g weapons
Productivity
Output per unit of input
Economies of Scale
As output increases, long- run average falls
Rationing
Rising prices ration demand for a product
Allocative
Changing relative prices allocate scarce resources away from markets exhibiting excess supply and into markets which there is excess demand
Signalling
High prices signal firms to move into the market, low prices = move out
Division of labour
Different workers perform different tasks in the course of producing a good or service
