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an imposed tax by any level of government on any individual or entity (ex. income tax, wealth tax, property tax)
Direct Tax
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imposed taxes on goods and commodities (ex. sales tax)
Indirect Tax
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What are the two ways that taxes are involved in public policy?
- Raising revenue to run the government
- Redistribution
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If someone has more wealth than others, than they have the ability to pay more taxes. This is the equity of differing classes of people or ________.
Vertical Equity
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This kind of equity is defined amongst similar people on the same income bracket
Horizontal Equity
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Explain the changes in Income Effect.
Prices are NOT changing, ONLY INCOME has changed
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Explain the changes in Substitution Effect.
- Price increases, and consumption decreases
- (-) Negative for ALL TYPES OF GOODS
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What is the most important rule of the Price Effect?
Price increase will sometimes increase consumption, or decrease consumption DEPENDING ON THE NATURE OF THE GOOD.
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How do inferior goods affect the income effect?
If income decreases, good consumption of that inferior good increases
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What are the five major types of taxation?
- Taxes on EarningsTaxes on Individual Income
- Taxes on Corporate IncomeTaxes on Wealth
- Taxes on Consumption
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In the case of insurance, what is a deductible?
the money you pay out of pocket before your insurer can cover the rest
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What is a copayment?
A payment made at the time a service is provided and before insurers provide any assistance
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