C26 Government Expenditure Flashcards
What is government expenditure?
Money spent by the government on public goods and services
What is the government budget?
Planned spending and revenue for the next year
How may the government increase AD?
By spending more and going into a budget deficit to boost economics growth
What is the fiscal policy?
The use of taxation and government spending to boost of constrict the economy
What are the types of fiscal policies?
Reflationary (boosts the economy by spending more)
Deflationary ( government taxes more to decrease AD)
Automatic (automatically reacts to changes in the economic cycle)
Discretionary ( governments deliberately change the level of spending and tax)
What is the trade cycle?
How the economic growth of a country fluctuates over time
What are the main influence of net trade?
Exchange rates ( high currency value –> cheaper imports)
Changes in the state of the economics world
Degrees of protectionism (tariffs and quotas)
Non price factors such as advancement in tech
