Public Finance Ch1

Front 1

public finance

Back 1

The study of the role of the government in the economy.

Front 2

four questions of public finance

Back 2

`When should the government intervene in the economy?

`How might the government intervene?

`What is the effect of those interventions on economic outcomes?

`Why do governments choose to intervene in the way that they do?

Front 3

Market failure

Back 3

A problem that causes the market economy to deliver an outcome that does not maximize efficiency.

Front 4

redistribution

Back 4

The shifting of resources from some groups in society to others.

Front 5

direct effects

Back 5

The effects of government interventions that would be predicted if individuals did not change their behavior in response to the interventions

Front 6

indirect effects

Back 6

The effects of government interventions that arise only because individuals change their behavior in response to the interventions

Front 7

political economy

Back 7

The theory of how the political process produces decisions that affect individuals and the economy.

Front 8

public goods

Back 8

Goods for which the investment of any one individual benefits everyone in a larger group.

Front 9

social insurance programs

Back 9

Government provision of insurance against adverse events to address failures in the private insurance market.