Lesson 26 - Key Fiscal terms

Question 1

Define the term balanced budget?

Answer 1

When total government spending equals government tax receipts.

Question 2

Define the term budget deficit?

Answer 2

A budget deficit occurs when government spending is greater than tax revenues.

Question 3

Define the term budget surplus?

Answer 3

A budget surplus occurs when tax revenue is greater than government spending.

Question 4

Define the term crowding out?

Answer 4

Higher government spending causes an equivalent fall in private sector spending and investment.

Question 5

Define the term expansionary fiscal policy?

Answer 5

When the government is seeking to increase aggregate demand - through higher government spending and lower taxes.

Question 6

Define the term income tax?

Answer 6

Income tax is a type of tax levied on an individual’s wages, salaries and other types of income.

Question 7

Define the term national debt?

Answer 7

The UK national debt is the total amount that the government owes to the private sector and other purchasers of UK gilts.

Question 8

Define the term progressive tax?

Answer 8

Imposing a lower tax rate on low-income earners and a higher tax rate on those with a higher income.