Fiscal Policies

Question 1

What happens in a expansionary

fiscal policy?

Answer 1

Ad shifts out
A cut in disposable income taxes
A increase in government spending

Question 2

What happens in contractionary

fiscal policy?

Answer 2

Ad shifts in
Reducuction in government spending
Increase in income tax

Question 3

What is fiscal policies?

Answer 3

Fiscal policy is the use of government spending and taxation to influence the economy.

Question 4

What do direct taxes affect?

Answer 4

Direct taxes affect income, wealth and profit.
This includes income tax, inheritance tax, capital gains tax, corporation tax etc.
This tax can not be given onto others.

Question 5

What do indirect taxes affect?

Answer 5

Indirect taxes affect spending.
This can be excise duties and also Value Added Tax(VAT)
This can be passed to consumers off of producers.

Question 6

Define progressive taxation

Answer 6

As income rises the rate of tax affects you more.

Question 7

Define regressive taxations

Answer 7

The rate of tax decreases the higher your income is.

Question 8

Define proportional taxation

Answer 8

This is when the tax rate is balance no matter how much income is made.

Question 9

Define budget deficit

Answer 9

When tax are insufficient to pay for state spending, a government must borrow

Question 10

Define budget surplus

Answer 10

When there is more income than spending