Download Chapter 14 and 15 Economics

What is a sin tax? What is its purpose and
function as a government restriction on the use of
individual property?
A sin tax is a relatively high tax designed to raise revenue while
reducing consumption of a socially undesirable product.
The purpose of this tax is to discourage harmful behavior. The
restriction makes the personal behavior more expensive.
What is a proportional tax, progressive tax, and
regressive tax?
Proportional tax: same percentage regardless of income.
Progressive tax: rate of taxation increases as income increases.
Regressive tax: rate of taxation decreases as income increases.
What is the economic impact of taxes as described
in section 1?
Taxes on goods and services generally are passed to the consumer,
which increases the cost and may discourage consumers from buying
more. A decline in economic activity can affect production, which may
lead to fewer employment opportunities.
What makes a tax effective?
For a tax to effective it must have equity, simplicity, and efficiency.
Why do lawmakers consider alternative taxes?
As the country grows, there is a need for more government services.
These services are funded by tax revenue. To find ways to increase
revenue, alternative methods of taxation are often proposed and
considered.
Why is the tax code continually revised?
Tax reform is a political as well as economic issue. Politicians have
different ideas about how taxes affect the overall economy.
What is a transfer payment made by the
government?
A transfer payment is a payment to a party in which the government
receives neither goods nor services. Ex: Social Security payments.
How does the collection of taxes allow our
government to help its citizens and keep them
safe?
The U.S. Constitution allows Congress to lay and collect taxes for
providing national funding and for the general welfare of its citizens.
What are the main sources of government
revenue?
Individual income taxes, borrowing, payroll taxes, and corporate taxes.
How does the federal government determine a
federal budget?
The president draws up and sends a budget to the House, which may
alter it. The House sends it to the Senate. The Senate’s version is
reconciled with the House budget, then goes to the president; who
signs it or vetoes it.
Why is it difficult to reduce the national debt?
People do not want programs they like to be cut, there are legislative
failures to agree on spending cuts, and unexpected spending. There
are also too many loopholes in current tax laws.
Ex: the spending that occurred after the 2001 terrorist attack.
What role does a tax assessor play in determining
property taxes?
The tax assessor determines the value of property that will be taxed.
Where do states get most of their revenue?
Where does Texas get most of its revenue?
States get most of their revenue from intergovernmental resources.
State income taxes, sales taxes, license fees etc….
Texas gets most of its revenue from sales tax.
What are the largest state government
expenditure categories? What does the state of
Texas spend the most money on?
The largest state government expenditures are public welfare,
insurance and retirement benefits for state employees, and higher
education.
Texas spends the most money on health care with education coming in
second.
How are local government revenue sources
different from those of federal and state
government?
Local governments get a much larger portion of their revenue from
intergovernmental resources, property taxes, and utility revenues.
Explain what the main idea of Keynesian
economics says about the cause of economic
cycles.
The main idea of Keynesian economics (an approach designed to lower
unemployment by stimulating aggregate demand) is that government,
business, and investments all contribute to unstable business cycles.
What does the Laffer curve show?
The Laffer curve shows the hypothetical relationship between federal
income tax rates and tax revenues.
What effect does deregulation have on industry?
By relaxing or removing government regulations, the industry is free to
operate as it chooses with less government oversight.
How does increasing supply help improve the
economy?
Smaller government and lower tax rates would stimulate the economy
by leaving more money in the hands of consumers and business who
would spend the money on consumer products and expansion, thereby
initiating more economic growth.
What is macroeconomics concerned with?
Macroeconomics is the part of economics concerned with the economy
as a whole and decision making by large units.
Which type of economic policy, supply side or demand
side, do you think has the most advantages and the
fewest disadvantages? Explain your answer.
Answer on own, I will grade according to your answer.