2.5 Fiscal policy and supply-side policies

Question 1

fiscal policy

Answer 1

changes in government spending or taxation to achieve economic change

Question 2

direct tax

Answer 2

tax which cannot be avoided, usually on income

Question 3

indirect tax

Answer 3

taxes which can be passed on to to others, usually on expenditure

Question 4

progressive tax

Answer 4

a tax that increases as a proportion of income as income increases

Question 5

regressive tax

Answer 5

a tax that decreases as a proportion of income as income increases

Question 6

proportionate tax

Answer 6

a tax that is paid as equal proportion of income at all levels of income

Question 7

budget balance

Answer 7

difference between government spending and taxation

Question 8

cyclical budget defecit

Answer 8

caused by lower economic growth

Question 9

structural budget deficit

Answer 9

remains when growth is higher or lower

Question 10

national debt

Answer 10

accumulated stock of outstanding bonds issued, due for eventual repayment

Question 11

supply side policies

Answer 11

increase the productive capacity of an economy

Question 12

supply side improvement

Answer 12

natural increases in productive capacity of economy

Question 13

free market supply side

Answer 13

increases productive capacity by making markets work more efficiently by reducing red tape

Question 14

interventionist supply side

Answer 14

policies to increase productive capacity by direct intervention on macro economy