CC6 Flashcards
Monetary Policy
The use of changes in the base rate of interest and the money supply to influence the rate of growth of aggregate demand and the rate of inflation
Interest Rate
The price of money i.e reward for saving or the cost of borrowing
Bank Rate
The interest rate set by the Monetary Policy Committee of the Bank of England - the rate the Bank pays on commercial bank reserves
Quantitative easing
The process by which liquidity in the Economy is increased when the BoE purchases assets from banks
Fiscal policy
The manipulation of government spending and taxation to change aggregate demand and achieve macroeconomic objectives
The Budget
The annual statement of planned spending and tax revenue
Budget Deficit (fiscal)
Government spending exceeds tax revenue
Budget Surplus (fiscal)
Tax revenue exceeds government spending
Direct Tax
Tax levied on income, wealth and profit
Indirect Tax
Tax levied on spending by consumers on goods and services. Imposed on suppliers, who may pass on the cost to consumers by raising prices. Therefore consumers indirectly pay tax
National Debt
Total outstanding gov debt that has accumulated over time
Supply-side policies
Government policies to increase the productive capacity or potential output of an economy
Free market supply-side policies
Interventionist supply
