Fiscal And S-SP Deffinitions

Question 1

Automatic stabiliser

Answer 1

Parts of fiscal policy that automatically react to changes of the economic cycle

Question 2

Balanced budget

Answer 2

​Achieved when government expenditure equals government revenue

Question 3

Budget deficit

Answer 3

Achieved when government expenditure exceeds government revenue

Question 4

Budget surplus

Answer 4

​Achieved when government revenue exceeds government expenditure

Question 5

Contractionary fiscal policy

Answer 5

​Fiscal policy implemented to decrease aggregate demand

Question 6

Corrpution

Answer 6

​Government failure through abuse of power

Question 7

Crowding out

Answer 7

When an increase in government spending displaces private spending, with little to no increase in aggregate demand

Question 8

Cyclical budget deficit

Answer 8

Part of the budget that tends to rise in economic slumps and fall in economic booms

Question 9

Debt sustainability

Answer 9

The ability to manage debt so that it doesn’t impede growth or stability

Question 10

Deficit financing

Answer 10

Borrowing to finance a budget deficit

Question 11

Deindustrialization

Answer 11

Decline in the manufacturing industry of an economy

Question 12

Demand side policy

Answer 12

​Government policies that aim to alter aggregate demand in the economy

Question 13

Deregulation

Answer 13

Removing regulations

Question 14

Direct tax

Answer 14

A tax on income and wealth

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Question 15

Discretionary fiscal policy

Answer 15

​Altering taxation and government spending as a response to an economic cycle stimulus (e.g. a recession)

Question 16

Dumping

Answer 16

When a producer exports products at a price lower than the prices charged in their home country, or lower than the costs of production

Question 17

Expansionary fiscal policy

Answer 17

​Fiscal policy implemented to increase aggregate demand

Question 18

Fiscal austerity

Answer 18

When the government enacts policies to reduce the size of a fiscal deficit

Question 19

Fiscal policy

Answer 19

​Use of government spending and taxation to achieve macroeconomic objectives

Question 20

Fiscal stimulus

Answer 20

​Changing taxation and government spending to boost demand and output

Question 21

Brain drain

Answer 21

When economies experience net outward migration of skilled/ young workers

Question 22

Hypothecation

Answer 22

​When tax revenue is saved to be used later for a specific purpose

Question 23

Indirect tax

Answer 23

A tax on expenditures

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Question 24

Interventionist policies

Answer 24

Occur when the government intervenes in, and sometimes replaces, free markets

Question 25

Marketisation

Answer 25

Shifting the provision of goods or services from the non-market sector to the market sector

Question 26

NRU

Answer 26

Natural rate of unemployment (NRU): ​Unemployment rate when the aggregate labour market is in equilibrium

Question 27

Principle of taxation (cannon of taxation)

Answer 27

​Criterion used to judge whether a tax is good or bad

Question 28

Privatisation

Answer 28

Shifting the ownership of state-owned assets to the private sector

Question 29

Progressive taxation

Answer 29

​Taxes where a larger proportion of income is paid as income rises

Question 30

Proportional taxation

Answer 30

Taxes where the same proportion of income is paid as income rises

Question 31

Reflationary policies

Answer 31

Policies to increase aggregate demand, with intent to increase real output and employment

Question 32

Regressive taxation

Answer 32

​Taxes where a smaller proportion of income is paid as income rises.

Question 33

Deindustrialise

Answer 33

​Growth in the manufacturing industry of an economy

Question 34

Structural budget deficit

Answer 34

​Part of the budget that is unaffected by the economic cycle, and is more dependent on the decisions of the government

Question 35

Supply side

Answer 35

Relates to changes in potential output of the economy which is affected by the factors of production

Question 36

Supply side improvements

Answer 36

​Reforms undertaken by the private sector to enable firms to become more productively efficient

Question 37

Supply side policies

Answer 37

Use of interventionist policies to encourage efficient markets, thus achieving macroeconomic objectives