2. Economic Policy and financial regulation Flashcards
Inflation
A general rise in prices of goods and services
Disinflation
Prices slowing down but still slightly rising
Deflation
Prices decreasing
4x Macroeconomics
- Price stability
- Low unemployment
- Balance of payments equilibrium
- Satisfactory economic growth
Recession
Decline in economic activity
Two consecutive quarters of negative growth
Gross Domestic Product (GDP)
Measurement of countries economic activity over the year
4x Economic Phases
- Recovery and expansion
- Boom
- Contraction/slowdown
- Recession
Consumer Price Index
- Measure of the change in price of a basket of consumer goods
- Items are reviewed regularly
Monetary Policy
Measures taken to control the supply of money
Lowering or rating interest (Inflation)
Bank Rate
The rate which BOE lends to other financial institutions
Inflation Target
2% inflation with 1% Divergence
Fiscal Policy
- Budgetary Policy
- Adjustment of public spending vs Tax
- Provide services like, education, healthcare and transport
Direct Taxes
Applied to individuals and their assets
- Income tax, capital gains, IHT, NI
Indirect Taxes
Applied to goods and services
-VAT and stamp duty
Balanced,Surplus and deficit budget
Surplus - Tax is more then public spending
Deficit - Public spending is more then tax
Balance- Tax and public spending are equal
