4.5.3 public sector finances Flashcards
what is the difference between an automatic stabiliser and a discretionary fiscal policy
AS = a policy that automatically increases spending in a recession, and decreases spending in a boom
discretionary fiscal policies are where the government actively put in place policies to increase or decrese spending and taxation
give an example of an automatic stabiliser and discretionary fiscal policy
AS = unemployment or income related benefits
DFP = paying furlough during lockdown
the difference between a fiscal deficit and the national debt
FD is when spending > taxation in a time period. natinoal debt is the total accumuilation of debt from prev years
what is the fiscal deficit and national debt at the moment of a % of GDP
FD 3.8% as of march 2022
national debt 96.2% to march 2022
what is the difference between a structural and cyclical deficit
structural deficit = the fiscal deficit that would persist if the economy grew at its trend rate of growth
cyclical deficit is the deficit that occurs as a result of a recession
what would cause a structural deficit and a cylical deficit
SD = increase in capital spending on hospitals
recessions for CD
3 factors that might influence the size of. a fiscal deficit
- state of the economy
- pandemic/external shock
- political beliefs of government
one factor that might influencve the size of national debt
budget deficits / surplus
would u say the uk fiscal deficit is high? what factors would u consider
historical context, whether it is risiing or falling, whether the economy is growing, what is happening i other countreis, what is causing the deficit
what factors would u consider for UK national debt if it was high
whether economy is growing or not, what %of current spending is interest on the national debt, ability / space to borrow any more if there was an external shock
