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AS Economics > Government Policy > Flashcards

Government Policy Flashcards

1
Q

What are direct taxes on?

A

Income

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2
Q

What are indirect taxes on?

A

Spending

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3
Q

What are examples of direct taxes?

A

Income tax, inheritance tax and corporation tax

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4
Q

What are examples of indirect taxes?

A

Sugar tax, V.A.T and excise duty

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5
Q

Describe fiscal policy

A

Manipulation of taxation and government spending

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6
Q

What is expansionary fiscal policy?

A

Cut taxes to stimulate economic growth

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7
Q

What is contractionary fiscal policy?

A

Raise taxes to stop growth

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8
Q

What is a budget surplus?

A

Taxes produce more revenue then government spend

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9
Q

What is budget deficit?

A

Spending is greater than tax revenue

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10
Q

What are the advantages in fiscal policy?

A

Good for employment, good influence on economic growth

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11
Q

What are the issue with fiscal policy?

A

Bad for inflation, problem for balance of payments

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12
Q

What is the national debt?

A

Debt accumulated over decades

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13
Q

Describe aims of Supply side policy

A

Policies that seek to improve of long-run productive potential in economy

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14
Q

Options to fulfil supply side policy

A

Deregulation, privatisation, cutting taxes, modification of welfare payments, reformation of trade unions, training and education, investment grants

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15
Q

What factors affect supply side policy?

A

Education, healthcare, training, raw materials and infrastructure

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16
Q

What policies can firms implement to improve supply side policies?

A

Investing in new equipment, building new equipment, expanding firms, developing technology, investing in human capital

17
Q

Describe monetary policy

A

Manipulation of rate of interest, money supply and exchange rate are influencers level of economic activity

18
Q

What is the MPC?

A

Comprises of 9 members, set interest rates and independent from banks

19
Q

What are the positives are monetary policy?

A

Increased real GDP, increased employment and increased quality of life

20
Q

What are the downsides to monetary policy?

A

Increased inflation and increased propensity to spend more money

21
Q

What happens when interest rates go up?

A

Investors move money to chase best deals

22
Q

Describe hot money

A

Movement of money around globe to get best deals

23
Q

What does the acronym SPICED stand for?

A

Strong Pound Imports Cheap Exports Dear

AS Economics (5 decks)

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