Lesson 48

Question 1

fiscal policy

Answer 1

changes in gov. spending + taxes

Question 2

expansionary fiscal policy

Answer 2

when gov. expenditure increases and/or taxation decreases

Question 3

contractionary fiscal policy

Answer 3

when gov. expenditure falls and/or taxation increases

Question 4

Current government expenditure

Answer 4

the day to day gov. spending on running costs e.g. wages of public sector workers

Question 5

Capital government expenditure

Answer 5

the money gov. spends on capital projects such as schools that leaves the gov. with assets

Question 6

research aggregate demand and fiscal policy graphs

Answer 6

N/A

Question 7

Multiplier effect

Answer 7

an increase in gov. spending leading to a domino effect

e.g. reductions in income tax leads increased A.D.

Firms respond to this by increasing investment which then further increases A.D.

Question 8

2 leakages from the circular flow of income

Answer 8

savings + taxes

Question 9

government budget defecit

Answer 9

gov. expenditure is larger than gov. revenue

Question 10

government budget surplus

Answer 10

gov. expenditure is less than gov. revenue

Question 11

government balanced budget

Answer 11

gov. expenditure equals government revenue