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KEMP-ROTH ACT: Officially titled the Economic Recovery Tax Act of 1981, this was a cornerstone of economic policy under President Reagan. The three components of this act were: (1) a decrease in individual income taxes, phased in over three years, (2) a decrease in business taxes, primarily through changes in capital depreciation, and (3) the indexing of taxes to inflation, which was implemented in 1985. This act was intended to address the stagflation problems of high unemployment and high inflation that existed during that 1970s and to provide greater incentives for investment. A primary theoretical justification is found in the Laffer curve relation between tax rates and total tax collections.
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GOVERNMENT INTERVENTION: Actions on the part of government that affect economic activity, resource allocation, and especially the voluntary decisions made through normal market exchanges. Government, by its very nature, is designed to intervene in voluntary market activity. Some of the more common types of government intervention includes taxes, price controls, assorted regulations, and control over government spending. The general justification for government intervention is that voluntary decisions by consumers and businesses fail to achieve efficiency or other goals deemed important by society. See also | government | market | market failure | public choice | voluntary exchange | involuntary exchange | tax | price ceiling | price floor | regulation | fiscal policy | regulatory policy | efficiency | economic goals |
Recommended Citation:GOVERNMENT INTERVENTION, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2019. [Accessed: November 17, 2019].
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DEADWEIGHT LOSS The decrease in the sum of consumer surplus and producer surplus that results from the imposition of a tax. When a tax drives a wedge between demand price and supply price it disrupts what otherwise would be an efficient market equilibrium. Inefficiency arises because while a portion of the sum of consumer and producer surplus is merely transferred to government, a portion of this sum also disappears. The part that disappears is the deadweight loss and is an indicator of the inefficiency of the tax.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway looking to buy either an instructional DVD on learning to the play the oboe or a small, foam rubber football. Be on the lookout for spoiled cheese hiding under your bed hatching conspiracies against humanity.
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The word "fiscal" is derived from a Latin word meaning "moneybag."
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"Security can only be achieved through constant change, through discarding old ideas that have outlived their usefulness and adapting others to current facts. " -- William O. Douglas, Supreme Court Justice
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BOA
Basic Ordering Agreement
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