Tax (Macroeconomics) with graphs
Overview
The document provides an in-depth analysis of various types of taxes and their implications in macroeconomics, with a particular focus on concepts relevant to IB and university-level economics courses. It includes detailed explanations, examples, and vi...
Indirect tax - a tax not paid directly by the consumer, instead it is placed on the producer.
This a ect the supply curve to shift left because the cost of production increase.
There are 2 kinds of indirect taxes that we focus on in IB
1. Ad Valoren tax (percentage tax- VAT )
Ad Valoren = according to value
A tax that is a percentage based on the selling price of the product.
Bene ts : imposing VAT on luxury goods can reduce inequality because rich people must be charged
more expensive on buying luxury goods.
2. Speci c tax
A xed amount of tax that is placed on a product
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