Fiscal Policy and Public Sector Failure (Grade 12 NSC Matric Economics): Flashcards
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Fiscal policy definition
Fiscal policy definition
Govt action via tax, spending, borrowing to influence economy
Three main instruments of fiscal policy
Three main instruments of fiscal policy
Taxation, government spending, and borrowing
Budget deficit
Budget deficit
When govt expenditure exceeds income
Budget surplus
Budget surplus
When govt income exceeds expenditure
Progressive tax system effect
Progressive tax system effect
Taxes higher earners at higher rates for even income distribution
Laffer Curve shows
Laffer Curve shows
Relationship between tax rates & revenue; optimal rate exists
Public sector failure definition
Public sector failure definition
Govt fails to provide goods/services effectively, worse than market
Management failure cause of PSF
Management failure cause of PSF
Ignorance, lack of leadership, experience, and training
Bureaucracy cause of PSF
Bureaucracy cause of PSF
Focus on rules over efficient service delivery to public
Social instability effect of PSF
Social instability effect of PSF
Loss of faith in govt, social unrest from failed services