Fiscal And S-SP Deffinitions Flashcards
Automatic stabiliser
Parts of fiscal policy that automatically react to changes of the economic cycle
Balanced budget
Achieved when government expenditure equals government revenue
Budget deficit
Achieved when government expenditure exceeds government revenue
Budget surplus
Achieved when government revenue exceeds government expenditure
Contractionary fiscal policy
Fiscal policy implemented to decrease aggregate demand
Corrpution
Government failure through abuse of power
Crowding out
When an increase in government spending displaces private spending, with little to no increase in aggregate demand
Cyclical budget deficit
Part of the budget that tends to rise in economic slumps and fall in economic booms
Debt sustainability
The ability to manage debt so that it doesn’t impede growth or stability
Deficit financing
Borrowing to finance a budget deficit
Deindustrialization
Decline in the manufacturing industry of an economy
Demand side policy
Government policies that aim to alter aggregate demand in the economy
Deregulation
Removing regulations
Direct tax
A tax on income and wealth
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Discretionary fiscal policy
Altering taxation and government spending as a response to an economic cycle stimulus (e.g. a recession)
Dumping
When a producer exports products at a price lower than the prices charged in their home country, or lower than the costs of production
Expansionary fiscal policy
Fiscal policy implemented to increase aggregate demand
Fiscal austerity
When the government enacts policies to reduce the size of a fiscal deficit
Fiscal policy
Use of government spending and taxation to achieve macroeconomic objectives
Fiscal stimulus
Changing taxation and government spending to boost demand and output
Brain drain
When economies experience net outward migration of skilled/ young workers
Hypothecation
When tax revenue is saved to be used later for a specific purpose
Indirect tax
A tax on expenditures
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Interventionist policies
Occur when the government intervenes in, and sometimes replaces, free markets
Marketisation
Shifting the provision of goods or services from the non-market sector to the market sector
NRU
Natural rate of unemployment (NRU): Unemployment rate when the aggregate labour market is in equilibrium
Principle of taxation (cannon of taxation)
Criterion used to judge whether a tax is good or bad
Privatisation
Shifting the ownership of state-owned assets to the private sector
Progressive taxation
Taxes where a larger proportion of income is paid as income rises
Proportional taxation
Taxes where the same proportion of income is paid as income rises
Reflationary policies
Policies to increase aggregate demand, with intent to increase real output and employment
Regressive taxation
Taxes where a smaller proportion of income is paid as income rises.
Deindustrialise
Growth in the manufacturing industry of an economy
Structural budget deficit
Part of the budget that is unaffected by the economic cycle, and is more dependent on the decisions of the government
Supply side
Relates to changes in potential output of the economy which is affected by the factors of production
Supply side improvements
Reforms undertaken by the private sector to enable firms to become more productively efficient
Supply side policies
Use of interventionist policies to encourage efficient markets, thus achieving macroeconomic objectives
