Fiscal and Monetary Policy (Edexcel A-Level Economics A): Flashcards
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Fiscal policy
Fiscal policy
Gov decisions on spending, taxation & borrowing affecting AD
Monetary policy
Monetary policy
Use of money supply & interest rates to influence AD
Expansionary fiscal policy
Expansionary fiscal policy
Increasing gov spending or reducing taxes
Government budget deficit
Government budget deficit
When gov spending (G) exceeds tax revenue (T)
Direct taxes
Direct taxes
Taxes levied on income (e.g. personal income tax)
Indirect taxes
Indirect taxes
Taxes on expenditure (e.g. VAT, excise duties)
Bank of England
Bank of England
The UK's central bank
Bank Rate
Bank Rate
Interest rate set by MPC to influence inflation
Quantitative easing (QE)
Quantitative easing (QE)
BoE purchases assets from banks to increase liquidity
MPC inflation target
MPC inflation target
2% per annum (CPI), within 1pp either way