Government Expenditure

Question 1

Fiscal policy

Answer 1

A government’s policy regarding taxation and public spending. It can be loose (with the emphasis on increased spending and lower tax revenue to boost economic activity, with the acceptance of a wider fiscal deficit) or tight (with the emphasis on cutting spending and raising extra tax revenue, resulting in a slower-growing economy.

Question 2

Government borrowing

Answer 2

The amount the government must borrow each year to finance their spending.

Question 3

Government debt

Answer 3

The total stock of unpaid debt issued by a government. A government will normally borrow money by issuing bonds or other securities.

Question 4

Government spending

Answer 4

Spending by government on education, health care and defence & other public services.

Question 5

Trade cycle

Answer 5

A trade cycle refers to fluctuations in economic activities specially in employment, output and income, prices, profits etc.