5th year Economics- Introduction to economics/Goverment Intervention

Normative Statement

An economic statement based on opinion E.g if the price of cigarettes rises it results in less people buying them.

oppurtunity cost

The cost of forgone alternatives

factors of production

Land, labor, capital and enterprise the four groups of resources that are used to make all goods and services

DIRT

Deposit Interest Retention Tax, A tax measure that taxes savings to encourage spending

Mixed economy

An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion.

Current expenditure

Government spending on the day-to-day running of the public sector, including raw materials and wages of public sector workers.

Capital expenditure

A once of cost for a business or organisation E.g Land or real estate.

budget surplus

the amount of money remaining when the government takes in more than it spends.

Expansionary budget

When there's a n increase in spending and cut in taxes.

Progressive taxation

Taxes that take into account the taxpayers ability to pay. E.g USC a income based tax.

Regressive taxation

Taxes that don't take into account the taxpayers ability to pay E.g not matter what your income everyone pays the same price for a bottle of coke, Non-income based.

Demerit good

A good that affects the consumers health

Externality

an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume

Cannon principles of taxation

1)Equity- is the tax fair 2)Economy- Is the tax cheap to collect 3)Certainty- Is the tax clear and certain 4) Convenience- Is the tax easy to pay

Excise duty

tax on goods such as alcohol, petrol and tobacco

USC

Universal Social Charge

LPT

local property tax

Stamp duty

A tax on certain transactions and instruments (credit cards)

Capital gains tax

a tax levied on profit from the sale of property or of an asset

Capital aquisitions tax

Tax on gifts and inheritance

corporation tax

A tax on company profits.

fiscal drag

The deflationary effect that occurs if government revenue is greater than government expenditure

Policy

A proposed or adopted course or principle of action

Fiscal policy

Actions taken by the gov to manage timing,magnitude and structure of gov revenue and expenditure.

Expansionary fiscal policy

An increase in government purchases of goods and services, a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate demand and expanding real output

contradictionary fiscal policy

During economic growth government decreases expenditure. Tax rates rise, to slow economic growth

fiscal neutrality

when gov revenue and spending are equal