Definitions

Question 1

Cyclical budget deficit

Answer 1

Budget deficit that is caused by phases of the economic cycle that economy is in (appears during recession and disappears with economic growth)

Question 2

Surructural budget deficit

Answer 2

Persists even during boom and is result of fundamental imbalance in government tax receipts and expenditure

Question 3

Budget deficit

Answer 3

Flow - shortfall between govement revenue and spending for a year covered by borrowing

Question 4

National debt

Answer 4

Stock - total of past borrowing still outstanding

Question 5

Office for budget responsibility (OBR)

Answer 5

Independent public body created by conservative party in opposition in 2009 before being formalised in 2019 enshrined in law in 2011

Question 8

Direct vs indirect tax

Answer 8

Direct - paid directly by individual or organisation tax burden cannot be passed on

Indirect - paid on transaction such as purchase of a good or service

Question 10

Natural rate unemployment

Answer 10

Where demand for labour and supply for labour are equal

Everyone is happy to work at the prevailing wage rate will have a job but may be some voluntary unemployment As workers look for better pay and working conditions

(Neo classical concept)

Question 11

Non - accelerating inflation rate of unemployment

Answer 11

Unemployment rate consistent with 0 inflation

Question 13

Money illusion

Answer 13

Workers fail to account inflation