9.1 Fiscal policy

Question 1

What is fiscal policy?

Answer 1

using government spending and taxation to influence the demand side of an economy

Question 2

What is fiscal policy?

Answer 2

using government spending and taxation to influence the demand side of an economy

Question 3

What is a direct tax?

Answer 3

taxes imposed on an individual or property

Question 4

What is an indirect tax?

Answer 4

taxes on a transaction or imposed on a producer

Question 5

What is a hypothecated tax?

Answer 5

taxes raised for a specific purpose

Question 6

What happens to supply when VAT is introduced?

Answer 6

The SRAS curve shifts left because firms cannot always full pass the increased VAT on to the consumer and this decreases profit margins. This then reduces the incentive to provide a good or service at any given price level.

Question 7

What are examples of supply side fiscal policy?

Answer 7

Targeted government spending - infrastructure improvements
Tax incentives
Reduce direct taxation

Question 8

What is national debt?

Answer 8

The amount of