governemnt budget Flashcards
(14 cards)
what is the government budget
the balance between government spending and reciepts
what is a budget deficit
if the government spends more than it recieved in tax revenue
what is a budget surplus
when the government spends less than it recieved in tax revenue
how does the government finance its deficit
by borrowing money (public sector net borrowing), by selling government bonds to investors
how does the government finance its deficit
by borrowing money (public sector net borrowing), by selling government bonds to investors, which it later pays back with interest
what’s the difference between debt and budget deficit
deficit is over a single financial year, debt is accrued over time
what is the cyclical section of the budget deficit
the part of the deficit which is a result of the state of the economy on the economic cycle
what is the cyclical section of budget deficit
the part of the deficit which is dependent on the state of the economy at that time (boom/recession)
what is the structural section of the budget deficit
the part of the budget deficit which is not related to the state of the economy
what’s the problem with cyclical and structural sections of the deficit
can’t be accurately measured
what is current government expenditure
spending on the maintenance of public good and services
what is capital government expenditure
government expenditure for the future benefit of the economy
what consequences of high government spending
crowding out
what is crowding out
resource- expansion of public sector leads to a shortage of resources in the private sector
financial- expansion of public sector funded by borrowing so there is increased demand for loans driving up the interest rate
