9.1 Fiscal policy Flashcards
What is fiscal policy?
using government spending and taxation to influence the demand side of an economy
What is fiscal policy?
using government spending and taxation to influence the demand side of an economy
What is a direct tax?
taxes imposed on an individual or property
What is an indirect tax?
taxes on a transaction or imposed on a producer
What is a hypothecated tax?
taxes raised for a specific purpose
What happens to supply when VAT is introduced?
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.
What are examples of supply side fiscal policy?
Targeted government spending - infrastructure improvements
Tax incentives
Reduce direct taxation
What is national debt?
The amount of