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Economics: An A-Z Guide by Matthew Bishop

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D

Deadweight cost/loss

The extent to which the value and impact of TAXATION, tax relief or SUBSIDY is reduced because of its side-effects. For instance, increasing the amount of tax levied on workers’ pay will lead some workers to stop working or work less, so reducing the amount of extra tax to be collected. However, creating a tax relief or subsidy to encourage people to buy life insurance would have a deadweight cost because people who would have bought insurance anyway would benefit.

Debt

“Neither a borrower nor a lender be,” wrote Shakespeare in Hamlet. Actually, the availability of debt, and the willingness to take it on, is a crucial ingredient of economic GROWTH, because it allows individuals, FIRMS and GOVERNMENTS to make investments ...

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