role of government in an economy Flashcards
what goods will government provide
private
merit
welfare benefits
public services
what are the 5 kinds of government regulations
intellectual property rights consumer protection laws competition law employment legislation environmental protection law
what is a subsidy
financial assistance provided by the government to reduce cop
what is a tax
levy or a charge to raise cop and reduce consumption
5 economic aims
full employment price stability economic growth balance of payments redistribution of income
5 possible conflicts between government aims
economic growth vs inflation full employment vs inflation eg vs bop eg vs environment eg vs redistribution of wealth
components of fiscal policy
taxation and government expenditure
when is a budget deficit said to exist
budget surplus
government expenditure > government revenue
government expenditure < government revenue
how can fiscal policy impact supply side of an economy
human capital investment
investment expenditure
incentives to work
limitations of fiscal policy
recognition lags
administrative lags
impact lag
components of monetary policy
interest rates
exchange rate and money supply
types of supply side policies
privatisation enterprise zones tax reforms deregulation capital investment human capital investment
merits of supply side policies
improved eg
lower inflation
lower unemployment
improved bop
three reasons for taxation
raise government profit
raise cop hence limit output
tariffs can protect domestic firms
what is tax burden
it is the amount of tax that households and firms have to pay
