Fiscal Policy Flashcards
1
Q
Fiscal Policy
A
May be defined as the manipulation of public spending, taxation, and borrowing to achieve the government’s macroecnomic objectives
2
Q
Progressive Tax system
A
A progressive tax system means that the proportio of a person’s income paid in tax increases as income increases
3
Q
A regressive tax system
A
sees the the proportion paid in tax fall as income increases
4
Q
Balanced Budget
A
G=T
5
Q
Budget deficit
A
G>T
6
Q
Budget Surplus
A
G<T
7
Q
Expansionary Fiscal Policy
A
Occurs when the government uses a budget deficit in order to boost AD and economic activity.
8
Q
Contractionary Fiscal Policy
A
Occurs when the govt. runs a budget surplus in order to depress the level of AD and economic activity
