Fiscal Policy

Question 1

What involved policies to reduce government spending (or higher taxes) in order to try and reduce government budget deficits?

Answer 1

Austerity

Question 2

What occurs when a government spends more in a given year than it collects in revenues, such as taxes.

Answer 2

Budget Deficit

Question 3

What occurs when tax revenue is greater than government spending?

Answer 3

Budget Surplus

Question 4

What is it called when there is automatic fiscal changes as the economy moves through stages of the business cycle?

Answer 4

Automatic Stabilisers

Question 5

What are non-transferable taxes paid by the tax payer to the government?

Answer 5

Direct taxes

Question 6

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?

Answer 6

Indirect Tax

Question 7

What is the money spent by the government on the development of machinery, equipment, building, health facilities, education?

Answer 7

Capital expenditure

Question 8

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?

Answer 8

Current expenditure

Question 9

What is the sum of annual budget deficits (and any offsetting surpluses.) and the total amount of money a country owes creditors?

Answer 9

National debt

Question 10

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?

Answer 10

Crowding out effect

Question 11

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?

Answer 11

Crowding in effect

Question 12

What policy’s focus is on maintaining a sufficiently-high level of aggregate demand so that the demand for labour remains strong?

Answer 12

Demand side policies

Question 13

What policies aim at making markets and industries operate more efficiently and contribute to a faster underlying-rate of growth of real national output?

Answer 13

Supply side policies

Question 14

What type of supply side policy focuses on limiting the intervention of the government?

Answer 14

Free market supply side policies

Question 15

Which type of supply side policy rely on the government intervening in the market?

Answer 15

Interventionist supply side policy

Question 16

What is the tax that limited companies pay on their profits?

Answer 16

Corporation tax

Question 17

What is the tax that is imposed on individuals or entities in respect of the income or profits earned by them?

Answer 17

Income tax

Question 18

What is a a tax in which the tax rate increases as the taxable amount increases?

Answer 18

Progressive tax

Question 19

What is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases?

Answer 19

Regressive tax

Question 20

What is it called when money is collected from a particular tax, which can only be spent for one particular purpose?

Answer 20

Hypothecated tax

Question 21

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?

Answer 21

Adam Smith’s Canons of Tax

Question 22

What is the tax called on increasing portions of the property price when you buy residential property?

Answer 22

Stamp Duty

Question 23

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?

Answer 23

Government Transfers

Question 24

What type of budget deficit takes into account fluctuations in tax revenue and spending due to the economic cycle?

Answer 24

Cyclical budget deficit

Question 25

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?

Answer 25

Structural budget deficit

Question 26

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?

Answer 26

The Laffer Curve

Question 27

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?

Answer 27

Government Credit Rating

Question 28

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?

Answer 28

Fiscal Rules

Question 29

What is an income tax system that levies the same percentage tax to everyone regardless of income?

Answer 29

Proportional Tax

Question 30

What is the general term for expenditure incurred by the government in the course of its activities?

Answer 30

Public expenditure