The use of government purchases, transfer payments, taxes, and borrowing to influence economy-wide variables such as inflation, employment, and economic growth.
Monetary Policy
Regulation of the money supply to influence economy-wide variables such as inflation, employment, and economic growth.
Ability-to-pay tax principle
Those with a greater ability to pay, such as those earning higher incomes or those owning more property, should pay more taxes.
Benefits-received tax principle
Those who get more benefits from the government program should pay more taxes.
Tax incidence
Indicates who actually bears the burden of the tax
Proportional Taxation
The tax as a percentage of income remains constant as income increases; also called a flat tax