fiscal policy Flashcards
tax
compulsory contribution to the government revenue
direct tax
a tax imposed by governments directly on an individual or organization
indirect tax
a tax imposed by government directly on spending
government budget
government document presenting the government’s proposed revenues and spending for a financial year
current expenditure
expenditure on goods and services consumed within the current year
capital expenditure
money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment.
balanced budget
when budget = revenue
national debt
the central government debt.
budget surplus
when export higher than imports
budget deficit
when export are lower than imports
fiscal policy
refers to the government’s policy on taxation (direct and indirect),government expenditure and transfer payments and their affect on aggregate demand and aggregate supply.
expansionary fiscal policy
designed to stimulate the economy during or anticipation of a business-cycle contraction
contractionary fiscal policy
Is a decrease in government expenditure and/or an increase in taxes that causes the government’s budget deficit to decrease or its budget surplus to increase
fiscal stimulus
An increase in public spending or a reduction in the level of taxation that might be performed by a government in order to encourage economic growth.
the crowding out effect
A situation when increased interest rates lead to a reduction in private investment spending such that it dampens the initial increase of total investment spending.
