LS11 Flashcards
1
Q
What is direct tax?
A
Tax levied directly on an individual or organisation
2
Q
Indirect tax?
A
A tax levied on a good or service
3
Q
What does a specific tax cause on the supply curve
A
A parallel shift
4
Q
A parallel shift in the curve means..
A
The tax is the same fixed amount at all prices
5
Q
Examples of specific tax?
A
Fuel duty, beer duty
6
Q
What is Ad Valorem
A
A tax that causes a non-parallel shift in the supply curve, this means that the tax increases as the amount sold rises
7
Q
Examples of Ad Valorem Tax
A
VAT, import tariffs
8
Q
Why do governments impose taxes?
A
To raise government revenues and/or discourage certain economic activities
9
Q
What are subsidies?
A
Money given by the government to encourage production in the economy
