17 terms


economic impact of taxes
resource allocation, behavior adjustment, productivity and growth
incidence of tax
final burden of productivity predicted by supply and demand
benefit principle of taxation
those who benefit from govt should pay in proportion to amount of benefit (tax built into gas prices, etc)
limitations of benefit theory of taxation
provide greatest benefit to those who can least afford it
ability to pay principle
taxed accd to ability to pay regardless of benefit (ind. income tax)
proportional tax
same % - flat
increase % on increased income
increase % on lower income (sales tax)
largest source of state revenue?
intergovernmental revenues, then sales tax
largest souce of local revenue
intergovernmental revenues, then property tax
2 types of government spending
expenditures on goods and services - most are public goods and 2. transfer payments (like grant in aid - neither goods nor services)
Federal budget - largest expenditure
1. social security 2. defense 3. income security
how debt effects economy
1. distribution of income across society 2. transfer purchases power from private to public sector 3. reduce incentive to work, save money, invest
commosity money
has alternative use as good or commodity (teabrick)
fiat money
money by govt decree
money sytem in colonies
some fiat (wampum), some commodity
money sytem today
inconvertible fiat monetary standard (can't be converted into gold or silver by citizens)