NAME _____________________________________________ DATE __________________ CLASS ___________Guided Reading ActivityTaxes and GovernmentSpendingLesson 1TaxesReviewQuestionsDirections:Read each main idea and complete the statements below. Refer to your textbook as you write theanswers.A. Economic Impact ofTaxesMain Idea:Taxes impact the economy. They may alter behavior, spending, income distribution, aneconomic growth and productivity.1.When a tax is placed on a product, itsPriceincrease, soDemandfor itmay decrease. People react to the higher price by buyingLess.2.ASintax is a relatively high tax intended to discourage certain undesirableProducts(liquor,tobacco.)3.Taxes affect theDistributionof income, or the way in which it is allocated among families,individuals, or other groups.4.Taxes can affectProductivityand economic growth by changing theincentives,or motivation, to save, invest, and work.5.TheIncidenceof a tax refers to who bears the finalBurdenof the tax.Indirect taxes can beShiftedto others, while a direct tax cannot. Show Upgrade to remove ads Only $35.99/year
Terms in this set (26)purpose of taxation governments need money to operate: they get this money primary via taxes revenue governments income: includes taxes public goods we want them, but no profit driven firm would provide these. What we expect from government: highways, national defence, education Power to tax - Constitution gives Congress the authority to tax - taxes must be for the general good, not individual needs (members of Congress) - Federal taxes must be the same in every state hyping Americans did not pay income tax until 1913 tax base object or item that is taxed individual tax based on a person's income corporate income tax based on a company's income property tax based on real estate value welfare tax collected from employers/employees to find welfare programs income tax most federal revenue comes from _______________. three tax structures Progressive taxes sales tax from the sale of goods or services excise tax from the production/sale of goods Progressive tax - % of income paid in taxes increases as income increases - wealthy people are taxed at a higher rate than lower - income people - A good example is the federal income tax - wealthier people are taxed at a higher rate than the rest of us proportional tax - % of income paid in taxes remains the same as all income levels - everyone pays the same tax rate regardless of their yearly income regressive tax - % of income paid in taxes decreases as income increases - Poor people are taxed at a higher rate then will be people ex: sales tax 2. but they spend a smaller part of their income on taxable products (such as food) than poor people incidence of tax The final burden of the tax, or who ends up paying it inelastic demand seller can easily ship the tax to the buyer elastic demand The seller bears the burden of the tax what makes a good tax simplicity simplicity must be easy for individuals and businesses to calculate the total tax payment, and easy to collect efficiency both the government and the taxpayers should not spend too much time or money in calculating, paying, and collecting taxes certainty taxpayers you know how much taxes due, and when it is due equity The tax system should be fair so that no one bears too much or too little of the tax burden benefits received principal A person should pay taxes based on the level of benefits they will receive from the government ability to pay principle people should pay taxes according to their ability to pay (favors progressive taxation) Recommended textbook solutions
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ECONOMICS On a separate sheet of paper, write the letter of the key term that best matches each definition below. total fixed costs $$ \begin{matrix} \text{a. change in quantity supplied} & \text{ g. production function }\\ \text{b. diminishing returns } & \text{h. Law of Supply }\\ \text{c. fixed costs } & \text{ i. total cost }\\ \text{d. marginal analysis } & \text{ j. change in supply }\\ \text{e. marginal product } & \text{k. overhead }\\ \text{f. marginal revenue } & \text{ l. total product}\\ \end{matrix} $$ Verified answer ECONOMICS A survey shows an increase in drug use by young people. In the ensuing debate, two hypotheses are proposed: $$ \bullet $$ Reduced police efforts have increased the availability of drugs on the street. $$ \bullet $$ Cutbacks in education efforts have decreased awareness of the dangers of drug addiction. a. Use supply-and-demand diagrams to show how each of these hypotheses could lead to an increase in quantity of drugs consumed. b. How could information on what has happened to the price of drugs help us to distinguish between these explanations? Verified answer Other Quizlet setsArtist MAnagement78 terms Pictrus KIN310 Quiz Set #140 terms caroline_todPLUS ACCT 2361 Review55 terms savannah_luna1 Patho #2 Exam - GI and Endocrine210 terms shscheidt Related questionsQUESTION Receiving a product or service now, but paying for it later is known as: 6 answers QUESTION Dividing monthly living expenses by monetary assets provides one's 2 answers QUESTION To date, no one has been sentenced under the Economic Espionage Act. 2 answers QUESTION What are producers most likely to do if they decide their incomes are inadequate? 11 answers What is the relationship between government spending and taxes?The nature and composition of government expenditure influences economic growth and social welfare. Therefore, government expenditure, which influences national GDP, also influences government tax revenues.
How do taxes affect the economy?Tax cuts boost demand by increasing disposable income and by encouraging businesses to hire and invest more. Tax increases do the reverse. These demand effects can be substantial when the economy is weak but smaller when it is operating near capacity.
What are the 3 criteria for a tax?The three criteria for effective taxes are simplicity, efficiency, and equity.
What is the primary source of revenue for state governments?Taxes represent the largest single source of revenue for state and local governments.
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Guided reading activity taxes and government spending answers
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