4.5 Flashcards
What is fiscal policy
Government spending and taxation
What is monetary policy
Interest rates and Quantative easing
What is capital expenditure
Spending by the government on investment infrastructure e.g. bridges, motorways Potential growth
What is current expenditure
On going, day to day expenditure e.g. public sector wages, drugs for NHS Actual growth
What is a transfer payment
Money paid for no work done
What is Gorden Browns Golden Rule
The only expenditure that could be financed through borrowing is capital expenditure, as in the LR it would pay for itself. i.e through increases in productivity (Increases potential growth)
Name some factors that affect government spending
Level of GDP
Provision of public goods
Size of national debt\ Level of development
Level of inflation
Name the factors effecting governemnt spending
Level of GDP
Size of then National Debt
Rate of inflation
Provision of public goods
Level of development
Significance of different levels of public expenditure
( Decrease in Spending)
- Productivity and Growth increase
- Living standards decrease
- Inequaility increases
What is a direct tax
Give 2 examples
Tax on income/ profits
Income tax and corporation tax
Whats an indirect tax
GIve 2 examples
A tax on consumption
VAT and Excise duties
Whats inheritance tax
A tax on inheritance through generations
Whats capital gains tax
If an asset goes up in value, you pay a percentage
Doesnt apply to a first house
What % is national insurance tax
12% of salary
