Taxes Flashcards

1
Q

What is a direct tax?

A

Paid by an individual or an organization to an entity that imposed it

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2
Q

What is an indirect tax?

A

A tax levied on goods and services supplied by businesses .(part of the price) It includes both specific and ad valorem taxes

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3
Q

What is an ad valorem tax?

A

Based on the value of a good or service based on its value , expressed as a percentage

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4
Q

What is the incidence of tax?

A

The distribution of tax paid between consumers and producers

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5
Q

What is a subsidy?

A

A government grant to a firm, reducing production costs and encourages an increase in output

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6
Q

What is progressive tax?

A

Tax rate that increases or progresses as taxable income increases, directly proportional.

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7
Q

What is regressive tax?

A

A tax that is applied , regardless of income

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8
Q

What is an excise duty tax?

A

A tax imposed on specific goods or services

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9
Q

What is a Pigouvian tax?

A

A tax imposed on goods or services that create negative externalities

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10
Q

What are the effects of a subsidy/ what does it depend on?

A

Decrease production costs, increase output, increase profits/revenue=> SNP

HIDO: Opportunity cost, elasticity, SR/LR( Time lag)

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11
Q

What are the effects of a tax/ what does it depend on?

A

Increased production costs, decreased output, decreased profits/revenue=> lower dynamic efficiency

HIDO: Opportunity cost, elasticity, SR/LR( Time lag)

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12
Q

Why does the government use subsidies?

A

To solve market failure and encourage production/ increase affordability

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