Taxes and subsidies are tools used by governments to influence economic behavior from "summary" of Economics for Beginners by Andy Prentice,Lara Bryan
Taxes and subsidies are important tools that governments use to influence economic behavior. Taxes are charges imposed by the government on individuals and businesses based on their income or goods and services they buy or sell. These taxes help the government generate revenue to fund public services and projects. By changing tax rates, the government can influence consumer behavior and businesses' decisions.
For example, if the government wants to discourage people from smoking, they can increase taxes on cigarettes. This makes smoking more expensive, leading to a decrease in demand for cigarettes. On the other hand, subsidies are payments made by the government to individuals or businesses to encourage certain activities. Subsidies can be used to promote the production of certain goods or services that are considered...
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