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Exam Overview - Coggle Diagram
Exam Overview
Taxation
Tax: payments collected by the government from the household and business sectors with the purpose of funding government spending.
Roles: funds government spending and services, provides infrastructure, reinforces economic distribution, discourages unwanted behaviours.
Importance: allows the government to collect revenue and provide services that benefit the economy, influences economic activity and wealth distribution.
Progressive Taxation System: the percentage of tax pays is progressive in accordance with their income substantiality through tax brackets.
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Pros and Cons of PTS
Pros: economic distribution, collection of revenue, economic stability.
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Increase Consequences
Businesses: business costs and prices increase; employment, profits, expansion, revenue, and investment decrease.
Households: disposable income, consumption, and savings decrease.
Decrease Consequences
Businesses: business costs and prices decrease; employment, profits, expansion, revenue, and investment increase.
Households: saving, consumption, and disposable income increase.
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Economies
Traditional Economy
Characteristics: goods and services often traded through barter, customs and traditions dictate pricing, rare amongst contemporary societies.
Advantages: sustainable lifestyle, strong communities, active involvement.
Disadvantages: lacks modern technology, slow economic growth, vulnerable to disasters.
Examples: rural Brazil, indigenous tribes.
Mixed Economy
Characteristics: government and businesses work together, most businesses are privately owned with the government providing economically beneficial services.
Advantages: government offers consumers protection, economic stability, consumer choice.
Disadvantages: more laws, high taxes, government and businesses may disagree.
Examples: Australia, U.S.
Command Economy
Characteristics: government owns businesses and produces services, government dictates factors of production.
Advantages: everyone receives essentials/needs, able to respond effectively in the event of a disaster, less demand for employment.
Disadvantages: fewer consumer choices, businesses have little competition, less innovation.
Examples: Cuba, North Korea
Market Economy
Characteristics: businesses are privately owned, consumers determine demand, supply and demand dictates pricing, minimal government involvement.
Advantages: encourages innovation, provokes competition amongst businesses, significant consumer choice
Disadvantages: wealth inequality, businesses can be frail, risk of monopolies.
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Supply and Demand
Demand
Demand: the quantity of a good or service consumers are willing and able to purchase at a certain price and tiime.
Demand Shows: the inverse and direct relationship between the price supplied and the quantity produced.
Demand Curve: reflects the price consumers are willing and able to pay and the quantity consumers are willing and able to buy.
Law of Demand: price supplied by producers increases, quantity demanded by consumers contracts.
Supply
Supply: the quantity of a good or service producers are willing and able to produce at a certain price and time.
Supply Curve: reflects the price producers are willing and able to supply and the quantity producers are willing and able to sell.
Law of Supply: price consumers are willing and able to pay increases, quantity producers are willing and able to supply expands.
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Price Mechanism: interdependence between product prices, quantity demanded by consumers, and quantity supplied by producers.
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