Private Secetor Flashcards
Definition of Government intervention
When the government intervenes in the economy because the market is failing to meet the needs of the people.
Definition of emplyment subsidies
wage subsidies and to reduce unemployment,
Definition of Subsidies.
Financial assistance by government to influence the production and consumption of goods and services.
Definition of Producer subsidies
Payment to the producer with the aim of decreasing the price of a product.
Definition of Consumer subsidies
Is a payment to the consumer of a particular good or service
Definition of Taxes
Compulsory payments made by people and businesses of a country to the state.
Definition of Direct taxes
Taxes on income of individuals and businesses profit
Examples of Direct taxes.
- Personal income tax
- Corporate income tax.
Definition of indirect taxes
Taxes on the consumption of goods and services.
Examples of indirect taxes
- Vat (Value added tax)
- Expenditure taxes
Examples of Excise duty
Alcohol and tabacco.
Definition of Excise duty (Sin tax)
Tax levied onto consumption of particular goods
Definition of Customs duty
Added onto price of imported goods and usually calculated as percentage of value of the goods.
Definition of Transfer duty
Individuals and businesses pay when buying fixed property.
What is regressive tax?
Rate falls as income rises
What is progressive tax
Marginal rate of tax rises as income rises
What is proportional tax?
Levies same percentage tax to everyone regardless in income.
What is welfare?
Refers to economic well-being of the public, is action designed to promote basic physical and material well-being of people in need.
What is production.
When the government provides goods and services which are not provided by the private sector
What are public goods
Goods provided for the benefit of a country like police or streetlights
What are merit goods
Goods and services that are needed by the whole community to improve welfare like housing and education
What is Privatization?
Sale of government-owned enterprises to private shareholders
What is nationalization?
When the government takes ownership of a businesses from the private sector
What is maximum prices?
When government sets price of product below market price
What is the black market
An illegal market where goods are bought and sold illegally and illegal prices are demanded
What are minimum prices
When government sets price of product above market price
What is dumping?
The sale of surplus products ina nother country al a lower price than the market price
What is minimum wages?
Minimums amount of compensation an employee must receive for work performed
What is unemployment?
When people who want to work and can work but cannot find work.
