3.5 Fiscal Policy key terms

Question 1

define the term government spending

Answer 1

the total amount of money spent by the government in a given period of time

Question 2

define the term government revenue

Answer 2

the source of finance for government spending

Question 3

define the term direct tax

Answer 3

a tax on income or wealth

Question 4

define the term indirect tax

Answer 4

a tax on spending, often defined as a tax on goods and services

Question 5

define the term balanced government budget

Answer 5

when the government’s expenditure is equal to its revenue

Question 6

define the term budget deficit

Answer 6

when government’s expenditure is greater than its revenue

Question 7

define the term budget surplus

Answer 7

when the government’s revenue is greater than its expenditure

Question 8

define the term fiscal policy

Answer 8

a policy that uses taxation and government spending to affect the economy as a whole

Question 9

define income and wealth redistribution

Answer 9

government action, using mainly taxation and benefits, to reduce inequalities of income and wealth

Question 10

define the term progressive tax

Answer 10

a tax which takes a greater percentage of tax the higher the income