The Role of the State in the Macroeconomy (Edexcel A-Level Economics A): Flashcards

Gov decisions on public spending, taxation, and borrowing

Day-to-day spending on goods/services (salaries, running costs)

Spending on infrastructure and long-term projects

Payments to vulnerable households (universal or means-tested)

Progressive - redistribute income from high to low earners

Regressive - poor spend higher proportion of income on them

Stock of accumulated past borrowing from deficits

Deficit during downturn that disappears in upturn

Deficit that persists even at full employment

Gov borrowing raises interest rates, reducing private investment