fiscal policy I (L17)

Question 1

main budget receipts

Answer 1

taxes on income,wealth,expenditure
national insurance
income from assets

Question 2

how to calculate budget balance

Answer 2

receipts-outlays
net taxes- expenditure on goods

Question 3

main budget outlays

Answer 3

expenditure on goods (G)
transfer payments (pensions)
debt interest payments

Question 4

what does it mean if gov is in a deficit

Answer 4

its borrowing by issuing gov bonds
debt issuance by government

Question 5

gov debt
budget deficit/surplus effect on debt

Answer 5

outstanding debt, deficit adds to it, surplus lowers it
doesn’t have to all be paid back at once (diff maturities, diff pay back dates)

Question 6

what curve tells us relationship between tax rate and tax rev

Answer 6

laffer curve

Question 7

tax rev

Answer 7

lamda L(t)

Question 8

what derivative of tax rev maximises tax and why

Answer 8

-1
tax elasticity of labour supply- employment falls when tax rate increases