Public Sector Flashcards
G expenditures def (3) + what they include
-federal
-state
-local
outlays to goods and services including transfer payments
Difference G spending and G expenditures
G expenditures= type of G spending that includes transfer payments
What is the biggest G expenditure
Income security
What does income security include (6)
-medicare
-social security
-public assistance
-unemployment help
-retirement help
-disability help
What does income security include (6)
-medicare
-social security
-public assistance
-unemployment help
-retirement help
-disability help
2 largest sources of revenue of the G
1: Individual outcome
2: taxes
2 philosophies of tax fairness
1- Benefit received principle
2- Ability to pay principle
Benefit received principle def+ EX
Those who benefit more from taxes should pay more
EX gas
Ability to pay principle def
Those who have higher incomes should pay more taxes
Most popular
3 types of taxes
-progressive
-regressive
-proportional
Progressive tax def + what principle it follows
We pay more taxes as income rises
Follow ability to pay principle
Progressive tax def + what principle it follows
We pay more taxes as income rises
Follow ability to pay principle
Regressive tax def +4 EX
We pay less as income rises
-sales taxes (anything you buy)
-payroll taxes (tax on salaries)
-excise taxes (specific things)
-property taxes
Proportional tax / Flat tax def + what principle it does not follow
Charges same income tax regardless of income
Proportional tax / Flat tax def + what principle it does not follow
Charges same income tax regardless of income
Public choice theory def
Analysis of G choices
Benefit cost analysis def
Comparison of different choices to allocate resources
Benefit cost analysis def
Comparison of different choices to allocate resources
What choice does a rational firm take with marginal cost
Produce as long as marginal benefits exceed marginal cost
Is the social security tax regressive?
Yes
One of the problems with a growing national debt is the growing interest payments which must be paid on that debt.
The national debt is the total amount owed by the federal gov to owners of government securities which grows the interests rates and must be paid on the debt.
