Theme 2- Government expenditure (key terms)

Question 1

Public expenditure

Answer 1

Spending by central and local government - health, education transport, police, defence etc

Question 2

Government revenue

Answer 2

Money raised to pay for public expenditure through taxation

Question 3

Fiscal policy

Answer 3

Policies that change the level of government spending, taxation or borrowing in order to manage the level of AD

Question 4

Discretionary fiscal policy

Answer 4

These are intentional government policies to increase or decrease government spending or taxation

Question 5

Budget surplus

Answer 5

Where tax revenue exceeds public expenditure

Question 6

Budget deficit

Answer 6

Where public expenditure exceeds tax revenue

Question 7

PSBR

Answer 7

The budget deficit (public sector borrowing requirement) - public expenditure exceeds tax revenue