Policies In A Global Context Flashcards
Fiscal policy
using tax and public spending to influence the economy
discretionary fiscal policy
when politicians use their expertise and values to inform decisions over fiscal policy
Automatic stabilisers
when there is an automatic change in policy to mitigate any changes in AD
benefits spending increases when more people become unemployed/p
monetary policy
changes in the IR on changes in the monetary supply to influence the economy
IR change GFC
interest rate fell from 5.5% before the crash to 0.5% after
supply side policies
policies which aim to increase AS
supple side policy process
increase in spending on education
increase in supply of workforce
increase in AS
interventionist supply side policies
the govt spending more on the structure of the economy
market based supply side polices
reducing tax to encorage activity in the market
overlap between policies
lower corp tax
expansionary fiscal policy
market based supply side policies
common overlap between 2 policies
fiscal and ss
both occur when the government changes tax revenue
ways to manage the ER
buy/sell currency
chang base infrastructure
direct controls
policies outside market forces that could control parts of the economy
examples of direct control in the economy by govt
-greece capped bank withdrawals to 60 euros/day
- banning industrial waste dumping by firms
- minimum wage
why is minumun wage a direct control
mimic wage
outside of firms normal wage
inaccurate information in Kenyan education
to receive benifits for greater enrollemtn many policians and regualtors lied to govt and said that enrollemtn had increased
real GDP challenges
very challenging to collect data because of hidden shadow economy and informal economy in countries where poverty is higher and developemet is low
problems policy makers face
inaccurate info
Transfer pricing
when companies minimise the tax which they pay
Daughter companies
‘beats’ for apple
companies which allow less overall corp tax to be paid. This can be legal or illegal
Global costs of transfer pricing
hundreds of billions of USD
Regulat transfer pricing
Arms length principle
In any transaction the price should stay the same as if the goods were sold to third parties
Hungary- Arms length principle
Gained 370m usd in additional tax rev
