Theme4.4

Question 1

Public goods

Answer 1

Are goods which would under-provided and under-consumed because they have two key characteristics: non-excludability and non-rivalrous

Question 2

External Benefits

Answer 2

Are benefits to third parties who are not part of the transaction between producer and consumer

Question 3

External costs

Answer 3

Are costs to third parties who are not involved in the transaction between consumer and producer

Question 4

Public expenditure

Answer 4

Relates to expenditure by local central government, local authorities and public sector organisations

Question 5

Automatic stabilisers

Answer 5

Are changes in government spending or in tax revenue which occur automatically, with out deliberate action by the government

Question 6

Direct taxes

Answer 6

Taxes on income and wealth

Question 7

Indirect taxes

Answer 7

Are taxes on expenditure

Question 8

National debt

Answer 8

Is the total sum owed by the government to holders of government bonds, in other words it represents the total of a governments outstanding debt as it has accumulated over time

Question 9

Cyclical deficit

Answer 9

Is that portion of a county’s budget deficit that reflects changes in the economic cycle

Question 10

Structural deficit

Answer 10

Is the fiscal deficit which remains when the economy is normal or when the output gap it zero

Question 11

National living wage

Answer 11

Is a wage high enough to have a normal standard of living i.e. To be able to afford everyday things like food, transport and paying bills

Question 12

Quantities easing

Answer 12

Involves the central bank buying securities from financial institutions which has the effect of increasing the money supply

Question 13

Quantity theory of money

Answer 13

States that there is a direct and proportionate relationship between changes in the money supply and the price level