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ALLOCATION EFFECT: The goal of imposing taxes to change the allocation of resources, that is, to discourage the production, consumption, or exchange or one type of good usually in favor of another. This is one of two reasons that governments impose taxes. The other reason is the revenue effect. Because people would rather not pay taxes, taxes create disincentives to produce, consume, and exchange. If society deems that less of a particular good, such as alcohol, pollution, or cigarettes are "bad," then a tax can reduce its production and consumption, and thus change the allocation of resources.
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INTERNATIONAL MARKET A graphical model used to analyze the trade between two nations based on the domestic markets for a particular good in each nation. The international market combines the excess demand (or import demand) from one country with the excess supply (or export supply) from another to illustrate how two nations undertake mutually beneficial trade. The international market model also can be used to analyze the impact of tariffs, import quotas, and export subsidies.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time at a garage sale trying to buy either a replacement washer for your kitchen faucet or a stretchable, flexible watch band. Be on the lookout for jovial bank tellers.
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Three-forths of the gold mined each year is used to manufacture jewelry.
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"Laughter is the shortest distance between two people. " -- Victor Borge, musician, humorist
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IBB
International Bank Bonds
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