Public Finance Flashcards
What is budget deficit?
When gov spending is more than tax revenue
What is budget surplus
When the gov tax revenue is greater than gov spending
What is a balanced budget?
When tax revenue equals gov spending
What is direct tax
Tax paid directly to the government
Examples of direct tax
Income tax
Corporation tax
What is regressive tax
The proportion of tax decreases as you earn more
What is indirect tax?
A tax on goods and services which the producers pay to the government
What are the 2 types of indirect tax
Specific tax
Ad valorem tax
How can the uk gov fund its budget deficit
By borrowing, issuing government bonds
What does the government have To do to decrease the budget deficit
They would have to increase tax revenues and decrease gov spending
How much did the government spend in 2014?
£732 billion all together
£98b on education
£140b on healthcare, the NHS and funding research
£32b on public order and safety eg police officers
£462b on national defence transport and housing
What is a budget deficit
When gov spending is greater than tax revenue
What is a budget surplus
When gov spending is less than tax revenue
What is a balanced budget
When gov spending = tax revenue
What is a BoP current account deficit
When current account outflows( money leaving) is greater than the inflows( money coming in)
