5.2 Fiscal policy. Flashcards
Define the term “fiscal policy”
The use of taxation and government spending to influence aggregate demand.
Define the term “government budget”
An annual statement in which the gov. outlines plans for its spending and tax revenue.
Define the term “Budget surplus”
Government revenue exceeding government expenditure.
Define the term “Budget deficit”
Government expenditure exceeding government revenue.
Define the term “Balanced budget”
Government revenue equaling government expenditure.
Define the term “Automatic stabilizers”
Changes in government spending and taxation that occur to reduce fluctuations in aggregate demand without any alteration in government policy.
Define the term “Cyclical budget deficit”
A budget deficit caused by a decline in economic activity.
Define the term “Structural budget deficit”
A budget deficit caused by an imbalance between government spending and taxation.
Define the term “Tax base”
The coverage of what is taxed.
Define the term “National debt”
The total amount of government debt.
Define the term “Specific taxes”
Taxed that are charged as a set amount per unit.
Define the term “Sin taxes”
Taxes on products considered harmful to consumers.
Define the term “Direct taxes”
Taxes on income and wealth.
Define the term “Tax avoidance”
The legal bending of the rules of the tax system to pay less tax.
Define the term “Tax evasion”
The illegal non-payment or underpayment of a tax.
