2.6.2 Intro to Fiscal Policy Flashcards
1
Q
define fiscal policy
A
involves changes to government spending, borrowing and taxation aimed at influencing one or more of the components of AD
2
Q
what is fiscal policy controlled by
A
the UK government through the budget
3
Q
what is the budget
A
a forecast of government spending and taxation for the forthcoming year
4
Q
who is the current chancellor of the exchequer
A
rachel reeves
5
Q
what are the different areas of government spending
A
- welfare benefits and other transfers
- current spending on public services
- capital spending
6
Q
what are the different areas of taxation
A
- indirect taxes on spending
- direct taxes on income and wealth
7
Q
what is a fiscal deficit
A
government spending > taxation
8
Q
what is a fiscal surplus
A
taxation>government spending
9
Q
what is a fiscal balance
A
government spending=taxation
10
Q
why is fiscal policy used
A
- correcting for market failures
- changing the final distribution of income and wealth
- stabilising and stimulating AD
- improving the economy’s supply-side potential
- responding to crises caused by external shocks
