3.1 Fiscal Policy

Question 1

What is the government budget comprised of

Answer 1

Tax revenues and government expenditure

Question 2

What is a proportional tax

Answer 2

Question 3

What is a progressive tax

Answer 3

Question 4

What is a regressive tax

Answer 4

Question 5

What is a direct tax

Answer 5

Question 6

What is an indirect tax

Answer 6

Question 7

What are the two types of indirect taxes

Answer 7

Ad valorem taxes

Specific taxes

Question 8

What are ad valorem taxes

Answer 8

Question 9

What are specific taxes

Answer 9

Question 10

What are the features of a good tax

Answer 10

Question 11

What is a flat tax

Answer 11

A flat tax is a uniform tax rate on income, regardless of the level of income

Question 12

Advantages of a flat tax system

Answer 12

Question 13

Disadvantages of a flat tax system

Answer 13

Question 14

What is current government expenditure

Answer 14

Question 15

What is capital government expenditure

Answer 15

Question 16

What is meant by fiscal stance

Answer 16

This is the impact that taxes and government spending has on the future economy

Question 17

What is meant by budget position

Answer 17

This refers to whether the government has a deficit, surplus, or if the budget is balanced

Question 18

What does it mean if a government has a budget surplus

Answer 18

When tax receipts exceed expenditure

Question 19

What does it mean if a government has a balanced budget

Answer 19

When expenditure is equal to revenue

Question 20

What does it mean if a government has a budget deficit

Answer 20

When expenditure exceeds tax receipts in a financial year

Question 21

What is meant by national debt

Answer 21

The amount of money the government has borrowed at one time through issuing securities by the treasury

Question 22

What is a cyclical budget position

Answer 22

Question 23

What is a structural budget position

Answer 23

Question 24

What is meant by the overall budget position

Answer 24

This is an scum of deficits and surpluses over time to give the overall budget

Question 25

What is meant by budget position on current expenditure

Answer 25

This is the flow of cash during one period of time

Question 26

How can a deficit be reduced

Answer 26

Using austerity measures, such as cutting government spending on local authorities

Question 27

What are the consequences of government debt

Answer 27

Question 28

What is discretionary fiscal policy

Answer 28

Question 29

What are automatic stabilisers

Answer 29

Question 30

What so meant by crowding out

Answer 30

Question 31

What is meant by crowding in

Answer 31

Question 32

What is meant by marginal rate of tax

Answer 32

This is the rate of tax applied to the next unit of currency of the income

Question 33

What is meant by the garage rate of tax

Answer 33

This is the total tax paid divided by total income. It is a proportion of income

Question 34

How can discretionary fiscal policy be used to improve macroeconomic performance

Answer 34

Question 35

What is expansionary fiscal policy

Answer 35

Question 36

Show expansionary fiscal policy of a diagram

Answer 36

Question 37

What is deflationary fiscal policy

Answer 37

Question 38

Show deflationary fiscal policy on a diagram

Answer 38

Question 39

What are the limitations of fiscal policy

Answer 39

Question 40

What is meant by fiscal rules

Answer 40

Question 41

What does the laffer curve diagram look like

Answer 41

Question 42

Explain the laffer curve

Answer 42