What are the four Questions of public finance ?
1) When should the government intervene in the economy
2) How might the government intervene?
3) What ist the effect of those interventions ?
4) Why do governments choose to ontervene in the way that they do ?
What are the reasons for government interventions ?
market failure
Redistribution
How the Government might Intervene ?
Tax
Subsidies
Quotas
Mandates
Public Provision
Public Financing of Private Provision
What are the effects of Interventions on economic Outcomes ?
Direct Effect : The effects of government interventions that would be predicted if individuals did not change their behavior in response to their interventions
Indirect Effect: The effects of government interventions that arise only because individuals change their behavior in response to their interventions
How to call goods for which the investment of any one individual benefits everyone in a large group ?
Public Good
What forms of taxation exists ?
What is the meaning of Public Finace ?
the study of the role of the government in the economy
What is a market failure ?
A Situation in which the market outcomes does not maximise efficiency
What is a negative externality?
A cost imposed on others that is not taken into account by the decision-maker.
What is redistribution?
The shifting of resources from some groups in society to others.
What is the equity–efficiency trade-off?
The trade-off between a more equal distribution of resources and overall economic efficiency.
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