Implementing policy (OCR A-Level Economics): Flashcards
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Practise the cards
15 cards from this deck
Fiscal policy definition
Fiscal policy definition
Use of government spending & taxation to influence the economy
Direct tax
Direct tax
Tax levied directly on income or wealth
Indirect tax
Indirect tax
Tax collected by intermediary; burden passed to consumers via prices
Progressive tax
Progressive tax
Tax rate increases as taxable amount increases
Regressive tax
Regressive tax
Tax rate decreases as taxable amount increases
Proportional tax
Proportional tax
Tax rate remains constant regardless of taxable amount
Budget surplus
Budget surplus
Government revenue exceeds its expenditures
Budget deficit
Budget deficit
Government expenditures exceed revenue; leads to borrowing
Balanced budget
Balanced budget
Government revenue equals its expenditures
Current govt expenditure
Current govt expenditure
Spending on day-to-day operations (recurring expenses)
Capital govt expenditure
Capital govt expenditure
Spending on long-term investments (one-time expenses)
Cyclical budget position
Cyclical budget position
Fiscal balance that varies with the economic cycle
Structural budget position
Structural budget position
Fiscal balance adjusted for economic cycle at full potential
Crowding out
Crowding out
Increased govt spending raises interest rates, reducing private investment
Laffer Curve concept
Laffer Curve concept
Relationship between tax rates & revenue; optimal rate maximizes revenue