Evaluation Flashcards
1
Q
What is the multiplier effect?
A
The proportional increase or decrease in final income resulting from an injection or withdrawal of capital.
2
Q
What is the theory of Second Best?
A
when resources are taken away from their intended use and put towards the second best use
3
Q
What is the J-curve?
A
It is the theory that the economy will get worse before it gets better and it also applies the other way around where the economy may get better before it gets worse.
4
Q
How can you evaluate increased tax revenue?
A
The government may decide to use the extra tax revenue to pay off debt, so in the short term, there will be no improvement in public services and therefore living standards from this extra tax revenue - though maybe yes in the long term with cheaper gov loans
