Public finances the UK budget

Question 0

The budget largely looks at…

Answer 0

Income

Question 1

Fiscal policy is…

Answer 1

Directing the economy via government spending and taxation

Question 2

The CSR (comprehensive spending review looks more at…

Answer 2

Spending

The. CSR is general guidelines on how they are going to spend their money

Question 3

Adam S. four criteria’s of taxation:

Answer 3

A good tax should be:
Equitable 
Economical 
Convenient
Certain

Question 4

An example of a good tax is…

Answer 4

Income tax

Question 5

A convienient tax would be…

Answer 5

A PAYE (pay as you earn tax)

Question 6

3 types of tax:

Answer 6

Direct taxes

Indirect taxes

Question 7

Examples of direct taxes (5)

Answer 7

Income tax
National insurance contributions (NICs)
Council tax 
Corporation tax 
Inheritance tax

Question 8

Taxes should not create a major incentive for people to their change behaviour.

Answer 8

Fiscal neutrality

Question 9

When you work you pay these taxes out…

Answer 9

Income tax and NICs (social security tax)

Question 10

Income tax is % of governments income

Answer 10

25% (1/4)

Question 11

Examples of indirect taxes (3)

Answer 11

VAT
Excise duties
Custom duties

Question 12

Progressive taxes hit the…

Answer 12

Rich harder

Question 13

An example of a progressive tax is…

Answer 13

Income tax

Question 14

Regressive taxes hit the…

Answer 14

Poor harder

Question 15

Examples of a regressive tax are…

Answer 15

Poll tax

VAT

Question 16

Main way to run the economy after WW2

Answer 16

Using fiscal policy (Keynesian policy)

Question 17

Keynesian demand management was about…

Answer 17

Using the budget to run the economy (could be used to boost AD)

Question 18

Fiscal stance:

Answer 18

Expansionary
Contractionary
Neutral

Question 19

An example of an expansionary fiscal stance:

Answer 19

Increase spending

Cutting tax

Question 20

An example of a contractionary fiscal stance:

Answer 20

Raise tax

Cut spending

Question 21

Two categories of spending

Answer 21

Current spending

Capital (investment) spending

Question 22

The budget deficit had two components

Answer 22

Structural deficit

Cyclical deficit

Question 23

The PSND is…

Answer 23

Total debt

Question 24

Budget deficit is

Answer 24

Annual debt

Question 25

Structural deficit:

Answer 25

‘discretionary spending’

Question 26

Monetarist argue that running a debt…

Answer 26

Has monetary consequences - causes inflation

Question 27

Monetarist argue that if the government borrow…

Answer 27

It crowds out private sector borrowing

Question 28

The BOE became independent in…

Answer 28

1997

Question 29

Target for the BOE

Answer 29

2% +-1%

Question 30

Two rules to run public finances

Answer 30

Golden rule

Sustainable investment rule

Question 31

The golden rule states that…

Answer 31

Only borrow to invest not current spending

Question 32

Sustainable investment rule states

Answer 32

National debt should stay below 40% of GDP

Question 33

National debt is currently at

Answer 33

78%

Question 34

What caused an initial increase in PSND to 78%?

Answer 34

Bailing out the banks - banks privatising

Question 35

The coalition gov. aim to..,

Answer 35

Reduce debt further and faster than labour

Question 36

Example of fiscal tightening and a problem..

Answer 36

Raising taxes
Cut gov. spending

Problem: most borrowing is structural

Question 37

Two examples of fiscal stimulus:

Answer 37

Temporary cut in VAT - boost spending

Car scrap age scheme

Question 38

Without fiscal tightening…

Answer 38

Debt could be “explosive”