2.4 Flashcards
1
Q
What is economic growth?
A
- increase in the real value of good
2
Q
What is short term economic growth?
A
- Actual growth → real increase in an economy’s GDP over a specific time
-Potential growth → Economy’s maximum sustainable rate of expansion without generating inflationary pressure → determined by spare capacity
3
Q
What is trend growth?
A
-Long term non-inflationary increase in GDP caused by an increase in a country’s productive capacity
- The average sustainable rate of economic growth over time is the trend rate of economic growth
4
Q
What is taxation?
A
-The process by which government collect revenue from individuals, business and other entities to finance public services, infrastructure and various government functions.
5
Q
What is a progressive tax?
A
-The more income you earn, the more tax you pay
6
Q
What is a Regressive tax?
A
-Takes a larger portion of income through tax
7
Q
What is proportional tax?
A
- Everyone pays the same rate of tax
8
Q
What are automatic stabilisers?
A
- Automatic fiscal changes,as a result of changes in the economic cycle.
9
Q
What is discretionary fiscal policy?
A
- Government actively intervenes / changes something to try to influence the economy.
