Google
Tuesday 
April 13, 2021 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
INDIVIDUAL RETIREMENT ACCOUNT: A savings retirement account set up with a bank, mutual fund, brokerage firm that allows people to set aside a portion of their income each year. Like other private pension plans, income diverted to an individual retirement account (or IRA) is tax deferred, that is, taxes on not paid on the income until it is withdrawn during retirement.

Visit the GLOSS*arama


INVOLUNTARY EXCHANGE:

The process of unwillingly trading one valuable commodity (good, service, or resource) for another, usually prompted by the coercive powers of government. The key term is "unwillingly," which distinguishes involuntary exchanges from voluntary exchanges, such as those that are the foundation of market transactions.
Involuntary exchanges are resource allocation activities imposed on the economy by government taxes, laws, and regulations. Unlike a voluntary market exchange, the "buyers" and "sellers" have little or no influence over the allocation decision. They pay the price, produce the good, or use the resources according to government mandates.

An Involuntary Exchange

Suppose, for example, that the Shady Valley City Commission imposes a 1 cent sales tax on all jogging shoes sold in the city. When Roland Nottingham buys a pair of jogging shoes for $75, the city collects 75 cents in sales taxes. The Shady Valley City Commission then decides to use this tax revenue, along with that collected from other jogging shoe sales, to erect a statue memorializing the career of former Mayor, Sylvester J. Peabody.

Roland is thus involuntarily forced to exchange his 75 cents for a portion of the Sylvester J. Peabody statue. This is a resource allocation decision that Roland would not have undertaken voluntarily. Roland did not like Mayor Sylvester J. Peabody. Roland did not like the political views held by Mayor Sylvester J. Peabody. Roland did not like any policy, program, or ordinance proposed by Mayor Sylvester J. Peabody. Roland would not have voluntarily paid for any part of a statue memorializing the career Mayor Sylvester J. Peabody.

But, as a taxpaying citizen of Shady Valley, Roland is forced to abide by the involuntary exchange imposed on him by the Shady Valley government.

<= INVISIBLE HAND


Recommended Citation:

INVOLUNTARY EXCHANGE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: April 13, 2021].


Check Out These Related Terms...

     | voluntary exchange | exchange | market |


Or For A Little Background...

     | allocation | three questions of allocation | efficiency | public sector | government functions |


And For Further Study...

     | private sector | capitalism | ownership and control | paternalism | political views | market | market equilibrium |


Search Again?

Back to the WEB*pedia


APLS

PINK FADFLY
[What's This?]

Today, you are likely to spend a great deal of time at a crowded estate auction hoping to buy either super soft, super cuddly, stuffed animals or a large stuffed brown and white teddy bear. Be on the lookout for empty parking spaces that appear to be near the entrance to a store.
Your Complete Scope

This isn't me! What am I?

The first U.S. fire insurance company was established by Benjamin Franklin in 1752 in Philadelphia.
"Education is the ability to listen to almost anything without losing your temper or your self-confidence. "

-- Robert Frost

CRRA
Constant Relative Risk Aversion
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2021 AmosWEB*LLC
Send comments or questions to: WebMaster