TOPIC 3 - FISCAL POLICIES Flashcards
WHAT IS A FISCAL POLICY?
GOVT SPENDING AND TAXATION THAT IS USUALLY SET OUT IN THE BUDGET.
WHAT IS CAPITAL EXPENDITURE?
REFERS TO LONG TERM INVESTMENT EXPENDITURE.
WHAT IS CURRENT EXPENDITURE?
RELATES TO THE GOVT’S DAY TO DAY EXPENDITURE ON GOODS AND SERVICES.
WHAT IS A TRANSFER PAYMENT?
PAYMENTS MADE BY THE STATE TO INDIVIDUALS WITHOUT THERE BEING AN EXCHANGE OF ANY GOODS OR SERVICES.
WHY DOES PUBLIC EXPENDITURE CHANGE OVER TIME?
- LEVEL OF TREND GDP
- SIZE AND AGE DISTRIBUTION OF POPULATION
- ECONOMIC CYCLE
- DEBT INTEREST
WHAT ARE THE 2 TYPES OF GOVT SPENDING?
- AUTOMATIC STABILISERS
- DISCRETIONARY
WHAT ARE AUTOMATIC STABILISERS?
HIGHER SPENDING AND LOWER TAX DURING A RECESSION AS UNEMPLOYMENT IS HIGH - DONE TO BOOST AD.
WHAT ARE DISCRETIONARY POLICIES?
DEPENDENT ON IDEOLOGIES AND ATTITUDE TOWARDS GOVT INTERVENTION.
WHAT IS A DIRECT TAX?
TAX LEVIED ON AN INDIVIDAL OR ORGANISATION.
WHAT ARE EXAMPLES OF DIRECT TAXES?
- INCOME TAX
- CORPORATION TAX
- INHERITANCE TAX
WHAT IS AN INDIRECT TAX?
TAX LEVIED ON PURCHASING GOODS OR SERVICES.
WHAT IS AN EXAMPLE OF INDIRECT TAXES?
- VAT
- EXCISE DUTY
WHAT IS A PROGRESSIVE TAX?
MARGINAL RATE OF TAX INCREASES AS INCOME RISES CAUSING A FALL IN INEQUALITY.
WHAT ARE EXAMPLES OF A PROGRESSIVE TAX?
- INCOME TAX
- CORPORATION TAX
- NATIONAL INSURANCE
WHAT IS A REGRESSIVE TAX?
MARGINAL RATE OF TAX FALLS AS INCOME RISES CAUSING A RISE IN INEQUALITY.
