Implementing Policy

Question 1

What is the fiscal policy

Answer 1

Governments spend/ tax to influence behaviour of economic agents and level of economic activity

Question 2

What is expansionary (fiscal policy)

Answer 2

Government spending increases
Taxation decreases

Question 3

What is contractionary (fiscal policy)

Answer 3

Government spending decreases
Taxation increases

Question 4

What is the government budget

Answer 4

Balance between receipts and spending

Question 5

What is current expenditure

Answer 5

Spending on goods and services eg. Prescription medicines, teachers salaries and road maintenance

Question 6

What are transfer payments

Answer 6

Welfare spending and interest payments on government debt

Question 7

What is capital expenditure

Answer 7

Spending by governments on capital goods eg. New infrastructure

Question 8

What is a budget deficit

Answer 8

Government spending > tax revenue

Question 9

What is a budget surplus

Answer 9

Government expenditure < tax revenue
Can be used to pay national debt

Question 10

What is a balanced budget

Answer 10

Government expenditure = tax revenue

Question 11

What is a cyclical deficit

Answer 11

A budget deficit but can disappear in the recovery

Question 12

What is structural defecit

Answer 12

A budget defect which persists even at full employment and reflects the changing structure of the uk economy