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Economics-Mankiw-P4
Definitions of the newest Mankiw (Special edition with financial crisis)Ch.10-12
| Question | Answer |
|---|---|
| Externality | the uncompensated impact of one person's actions on the well-being of a bystander |
| Internalizing an externality | altering incentives so that people take account of the external effects of their actions |
| Coase theorem | the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own |
| Transaction cost | the cost that parties incur in the process of agreeing and following through on a bargain |
| Pigovian tax | a tax enacted to correct the effects of a negative externality |
| Excludability | the property of a good whereby a person can be prevented from using it |
| Rivalry | the property of a good whereby one person's use diminishes other people's use |
| Private goods | goods that are both excludable and rival |
| Public goods | goods that are neither excludable nor rival |
| Common resources | goods that are rival but not excludable |
| Natural monopolies | goods that are excludable but not rival |
| Free rider | a person who receives the benefit of a good but avoids paying for it |
| Cost-benefit analysis | a study that compares the costs and benefits to society of providing a public good |
| Tragedy of the Commons | a parable that illustrates why common resources get used more than is desirable from the standpoint of society as a whole |
| Indirect tax | a tax that is levied on goods and services bought |
| Direct tax | a tax that is levied directly on a person's income |
| Budget deficit | an excess of government spending over government receipts |
| Budget surplus | an excess of government receipts over government spending |
| Lump-sum tax | a tax that is the same amount for every person |
| Average tax rate | total taxes paid divided by total income |
| Marginal tax rate | the extra taxes paid on an additional unit of income |
| Benefits principle | the idea that people should pay taxes based on the benefits they receive from the government |
| Ability-to-pay principle | the idea that taxes should be levied on a person according to how well that person can shoulder the burden |
| Vertical equity | the idea that taxpayers with a greater ability to pay taxes should pay larger amounts |
| Horizontal equity | the idea that taxpayers with similar abilities to pay taxes should pay the same amount |
| Proportionl (or flat) tax | a tax for which high-income and low-income taxpayers pay the same fraction of income |
| Regressive tax | a tax for which high-income taxpayers pay a smaller fraction of their income than do low-income taxpayers |
| Progressive tax | a tax for which high-income taxpayers pay a larger fraction of their income than do low-income taxpayers |
Created by:
Medardus
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