Government Income Redistribution and Economic Policies

A set of flashcards covering key concepts in government income redistribution, economic policies, and their effects.

Progressive Tax

A tax system where those with a higher income are taxed at a higher rate than those with a lower income.

Superannuation Policy

A policy requiring employers to contribute to an employee’s fund for future retirement.

Welfare Policy

Financial support provided to individuals such as disability support pension, aged pension, and unemployment benefits.

Lorenz Curve

A graphical representation of income distribution that illustrates the distribution of income or wealth within a population.

Externalities

Costs or benefits that affect third parties not involved in a transaction or economic activity.

Positive Consumption Externality

Benefits enjoyed by third parties when consumers engage in particular consumption activities, such as visiting museums.

Negative Consumption Externality

Adverse effects imposed on third parties due to consumption activities, such as pollution or obesity from unhealthy diets.

Positive Production Externality

Benefits to third parties from the production of goods that enhance social welfare, like renewable energy.

Negative Production Externality

Harmful impacts on third parties from production processes, including land and air pollution.

Command-and-Control Policy

A regulatory approach that sets specific limits or standards and enforces compliance by businesses.

Market-Based Policy

Policies that use economic incentives to encourage compliance and internalize external costs and benefits.

GDP Target

An ideal economic growth target set at 2-3%.

Inflation Target

The ideal inflation rate set at 2%.

Unemployment Target

The targeted unemployment rate set at 4-5%.

Reserve Bank

The institution responsible for controlling monetary policy and interest rates to stabilize the economy.

Monetary Policy

Actions by the Reserve Bank of Australia involving interest rate changes to influence economic activity.

Fiscal Policy

Government policy regarding taxation and spending to manage economic growth.

Expansion

The phase where the economy is growing, businesses produce more, and employment increases.

Peak

The highest point of economic growth before a slowdown occurs.

Recession

The phase where the economy begins to shrink, spending falls, and unemployment rises.

Trough

The lowest point in the business cycle, indicating weak economic activity before recovery.