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17 Cards in this Set
- Front
- Back
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Public choice model |
A model that applies economic analysis to government decision making. |
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Voting paradox |
The faliure of majority voting to always result in consistent choices. |
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Arrow impossibility theorem |
A mathmatical theorem that holds no system of voting can be devised that will consistently represent the underlying preferences of voters. |
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Median voter theorem |
The proposition that the outcome of a majority vote is likely to represent the preferences of the voter who is the political middle. |
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Rent seeking |
Attempts by individuals and firms to use government action to make themselves better off at the expense of others. |
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Most widely used taxes |
1. Individual income taxes 2. Social insurance taxes 3. Sales tax 4. Property taxes 5. Excise taxes |
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Progressive tax |
A tax for which people with Lower incomes pay a lower percentage of their income in tax than people with higher incomes. |
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Regressive tax |
A tax for which people with Lower incomes pay a higher percentage of their income in tax than people with higher incomes. |
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Marginal tax rate |
The fraction of each additional dollar of income that must be paid in taxes. |
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Average tax rate |
Total tax paid divided by total income. |
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Evaluating taxes- what governments take into account |
1. The goal of economic efficiency 2. The ability to pay principal 3. The horzonal equity principal 4. The benfits received principal 5. The goal of obtaining social objectives |
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Excess burden |
A measure of the effecieny loss to the economy that results from a tax having reduced the quantity of a good produced, also known as deadweight loss. |
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Tax incidence |
The actual division of the burden of a tax between buyers and sellers in a market. |
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Poverty line |
A level of annual income equal to three times the amount of money necessary to purchase the minimum quantity of food required for adequate nutrition. |
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Poverty rate |
The percentage of the population that is poor according to the federal government definition. |
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Lorenz curve |
A cure that shows the distribution of income by arraying incomes from lowest to highest on the horizontal axis and indicating the cumulative fraction of income earned by each fraction households on the vertical axis. |
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Gini coefficient |
(A/A+B) |
