Unit 3: Government and the Economy

Front

How can taxes be used to adjust behavior?

Back

By imposing higher taxes on harmful goods or activities and providing tax breaks or incentives for beneficial behaviors.

Front

How do taxes redistribute income?

Back

Taxes collect money from individuals and businesses which is used to fund government programs and services.

Front

How can taxes incentivize people to save and invest?

Back

By offering tax deductions or credits for contributions to retirement accounts or investments.

Front

What is the incidence of a tax?

Back

Who carries the final tax burden (who actually pays the tax)

Front

What is the benefit principle of taxation?

Back

Individuals should pay taxes based on the benefits they receive regardless of income

Front

What is the ability-to-pay principle of taxation?

Back

Individuals should be taxed according to their level of income, regardless of benefits received.

Front

Define deficit spending

Back

Deficit spending is when a government's expenditures exceed its revenues.

Front

Define purchasing power

Back

Purchasing power is the financial ability to buy goods and services

Front

What is an inflationary period?

Back

An inflationary period is a time when the general price level of goods and services rises.

Front

What is a recession?

Back

A recession is a period of economic decline characterized by a decrease in GDP and employment.