BA-110 w/ Perez
public finance
The study of government expenditure and tax policy and of their impact on the economy.
government expenditures
All spending by government agencies.
government revenue
All funds received by government agencies.
government purchases
Goods or services purchased by a government agency.
transfer payments
Payments made by government agencies to individuals in the form of grants rather than in return for labor or other services.
balanced budget
Situation that occurs when a government’s revenues equal its expenditures for a particular period.
budget surplus
Situation that occurs when a government’s revenues exceed its expenditures.
budget deficit
Situation that occurs when government expenditures exceed revenues.
merit good
Goods whose consumption the public sector promotes, based on a presumption that many individuals do not adequately weigh the benefits of the good.
demerit good
Goods whose consumption the public sector discourages, based on a presumption that individuals do not adequately weigh all the costs of these goods.
progressive tax
A tax that takes a higher percentage of income as income rises.
proportional tax
Tax that takes a fixed percentage of income, no matter what the level of income.
income taxes
Taxes imposed on the income earned by a person or firm.
property taxes
Taxes imposed on assets.
sales tax
Taxes imposed on the value of goods sold.
taxable income
The amount of income that is actually subject to any tax.
public interest theory
Theory that assumes that the goal of government is to seek an efficient allocation of resources.
public choice theory
Body of economic thought based on the assumption that individuals involved in public sector choices make those choices to maximize their own utility.
cost benefit analysis
. A type of economic analysis that seeks to quantify the costs and benefits of an activity.