Public Finance: Expenditures and Taxes

This set of flashcards covers key vocabulary and concepts related to public finance, expenditures, and taxes.

Public Finance

The study of the revenue and expenditures of government, focusing on how they affect the economy.

Expenditures

Government spending on goods and services, which includes purchases and transfer payments.

Transfer Payments

Payments made by the government to individuals without any expectations of goods or services in return.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Progressive Tax

A tax that takes a larger percentage of income from high-income earners than from low-income earners.

Regressive Tax

A tax that takes a larger percentage of income from low-income earners than from high-income earners.

Proportional Tax

A tax that takes the same percentage of income from all income levels.

Tax Incidence

The analysis of the effect of a particular tax on the distribution of economic welfare.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in price.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved.

Value-Added Tax (VAT)

A type of indirect tax added to the price of a product at each stage of production.

Tax Revenue

The income that is gained by governments through taxation.

Federal Personal Income Tax

A progressive tax imposed by the federal government on individuals' income.

Excise Tax

A tax on the production or sale of a specific good.

Corporate Income Tax

A tax imposed on a corporation's profits.

Payroll Taxes

Taxes imposed on employers or employees, usually calculated as a percentage of the salaries that employers pay their staff.

Efficiency Loss

The reduction in economic efficiency that can occur when an economy produces an output that is not allocatively efficient.

Apportioning the Tax Burden

The way in which tax burdens are distributed among consumers, producers, and the government.

Redistribution of Income

The transfer of income from some individuals to others through social mechanisms like taxation.