Fiscal Policy Flashcards
What involved policies to reduce government spending (or higher taxes) in order to try and reduce government budget deficits?
Austerity
What occurs when a government spends more in a given year than it collects in revenues, such as taxes.
Budget Deficit
What occurs when tax revenue is greater than government spending?
Budget Surplus
What is it called when there is automatic fiscal changes as the economy moves through stages of the business cycle?
Automatic Stabilisers
What are non-transferable taxes paid by the tax payer to the government?
Direct taxes
What is collected by one entity in the supply chain (usually a producer or retailer) and paid to the government, but it is passed on to the consumer as part of the purchase price of a good or service?
Indirect Tax
What is the money spent by the government on the development of machinery, equipment, building, health facilities, education?
Capital expenditure
What is the ongoing, day to day expenses of the country, and includes things like the cost of running our schools, hospitals and other essential services?
Current expenditure
What is the sum of annual budget deficits (and any offsetting surpluses.) and the total amount of money a country owes creditors?
National debt
what is it called when government spending fails to increase overall aggregate demand because higher government spending causes an equivalent fall in private sector spending and investment?
Crowding out effect
What is the phenomenon called that occurs when higher government spending leads to an increase in economic growth and therefore encourages firms to invest due to the presence of more profitable investment opportunities?
Crowding in effect
What policy’s focus is on maintaining a sufficiently-high level of aggregate demand so that the demand for labour remains strong?
Demand side policies
What policies aim at making markets and industries operate more efficiently and contribute to a faster underlying-rate of growth of real national output?
Supply side policies
What type of supply side policy focuses on limiting the intervention of the government?
Free market supply side policies
Which type of supply side policy rely on the government intervening in the market?
Interventionist supply side policy
What is the tax that limited companies pay on their profits?
Corporation tax
What is the tax that is imposed on individuals or entities in respect of the income or profits earned by them?
Income tax
What is a a tax in which the tax rate increases as the taxable amount increases?
Progressive tax
What is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases?
Regressive tax
What is it called when money is collected from a particular tax, which can only be spent for one particular purpose?
Hypothecated tax
These rules are often referred to as the four canons of taxation: (1) equity, (2) certainty, (3) convenience, and (4) economy. Who’s rules? And what are the rules called?
Adam Smith’s Canons of Tax
What is the tax called on increasing portions of the property price when you buy residential property?
Stamp Duty
What is the government expenditure called when it incurs redistribution of income and wealth by means of the government making a payment, without goods or services being received in return?
Government Transfers
What type of budget deficit takes into account fluctuations in tax revenue and spending due to the economic cycle?
Cyclical budget deficit
What type of budget deficit is then that excess of public spending over revenues which would persist if the economy were to grow steadily at its highest sustainable employment rate?
Structural budget deficit
What model displays the relationship between tax rates and tax revenue collected by governments and is often used to illustrate the argument that cutting tax rates can result in increased total tax revenue?
The Laffer Curve
A condensed assessment of a government’s ability and willingness to repay its public debt both in principal and in interests on time - what is this called?
Government Credit Rating
restrictions on fiscal policy set by the government to constrain its own decisions on spending and taxes. For example, they might require that the deficit (the difference between government spending and revenues) stays below a certain level. What is this called?
Fiscal Rules
What is an income tax system that levies the same percentage tax to everyone regardless of income?
Proportional Tax
What is the general term for expenditure incurred by the government in the course of its activities?
Public expenditure
