Unit 4 AoS 1 - Definitions

Question 1

Budgetary Policy

Answer 1

AD measure which relates to changes in anticipated levels and composition of gov receipts and outlays for upcoming year
aka. fiscal policy

Question 2

Budget Receipts

Answer 2

Fed gov incoming recepts of money that pays for budget outlays (e.g. taxes)

Question 3

Budget Outlays

Answer 3

Are expenses involving provision of GnS for community and transfers like welfare benefits

Question 4

AD Management Policy

Answer 4

Includes budgetary and monetary policy and is sed by gov to influence level of spending, EA and achievement of DMEG

Question 5

Direct Taxes

Answer 5

Are gov budget revenue measures levied as proportion of income received by indiv and firms

Question 6

Indirect Taxes

Answer 6

Are those added onto the price of GnS at the point of sale and are collected by a 3rd party

Question 7

Non-tax Revenue

Answer 7

Budget receipts from sources other than taxes like revenue from gov businesses and the sale of government assets

Question 8

Progressive Taxes

Answer 8

Designed to redistribute income more even by increasing marginal tax rates as personal income levels increase

Question 9

Regressive Taxes

Answer 9

Tax that tends to exaggerate income inequality where they rep a higher proportion of a lower income earner’s income than that for a higher income earner

Question 10

Proportional Taxes

Answer 10

Tax where tax rate remains constant irrespective of income level

Question 11

G1 Gov Current/Consumption Spending

Answer 11

Public expenditure on purchase of GnS for immediate use, including the daily running expenses of gov/purchase of consumer GnS

Question 12

G2 Gov Capital/Investment Spending

Answer 12

Involves provision and purchase of capital goods used to facilitate production of other GnS for community

Question 13

Gov Transfer Payments

Answer 13

Includes cash benefits paid to neediest individuals to top up disposable incomes or subsidies to certain businesses to encourage certain production types

Question 14

Budget Outcome

Answer 14

Refers to difference in value between gov receipts and outlays measured over a period of time

Question 15

Budget Balance

Answer 15

When total annual value of receipts is equal to total outlays

Question 16

Budget Deficit

Answer 16

Situation where total value of outlays exceeds receipts for period

Question 17

Budget Surplus

Answer 17

Represents situation where total value fo gov outlays is less than total value of its receipts measured over period of time

Question 18

Crowding Out

Answer 18

Situation when gov borrows locally which increases price for credit&raquo_space; % higher&raquo_space; difficult for prov sector to access funds to finance consumption and investment

Question 19

Headline Cash Outcome

Answer 19

Total cash value of budget receipts minus outlays from all sources without removal of items affected by one-off events

Question 20

Underlying Cash Outcome

Answer 20

Represents headline balance after subtracting the value of one-off volatile items like asset sales, Future Fund earnings, special loans to state gov or debt repayments by other govs

Question 21

Gov Debt

Answer 21

Occurs when there is a budget deficit, financed by borrowing

Question 22

Fiscal Consolidation

Answer 22

Refers to budget measures designed to reduce the size of budget deficit by discretionary rises in receipts/cuts in outlays

Question 23

Structural Budget Deficits

Answer 23

Caused by discretionary policy decisions that reduce receipts relative to outlays, not removed when no longer needed

Question 24

Cyclical Budget Deficits

Answer 24

When there is slowdown in EA which cases budget receipts to auto rise and outlays to fall

Question 25

Budget Stance

Answer 25

Refers to whether budget is neutral, expansionary or contractionary in its impact on the level of AD and EA

Question 26

Countercyclical Budget Policy

Answer 26

Serves to stabilise EA levels where it is... - Expansionary in slowdown (deficit >> AD up) - Contractionary in boom (surplus >> AD down)

Question 27

Automatic Stabilisers

Answer 27

Are changes in tax rev collected and welfare outlays built into the budget and operate spontaneously in a countercyclical way to help stabilise AD and flatten the BCD without federal treasurer deliberately changing their level or announcing new policies

Question 28

Discretionary Stabilisers

Answer 28

Are deliberate changes in tax rates, tax mix and the direction and composition of budget outlays that are specifically announced by the fed treasurer to help steady EA in response to serious econ developments

Question 29

Economic Stability

Answer 29

Is an ideal internal situation for an economy where there is the simultaneous achievement of 3 DMEG

Question 30

Goal of Strong and Sustain Econ Growth

Answer 30

Fastest rate of growth in a nation's production consistent with low inflation and other gov goals, annual rise of 3% growth avg, where AS is able to keep up with AD

Question 31

Low and Stable Inflation (Price Stability)

Answer 31

General GnS prices are rising fairly slowly with a target range of 2-3% a year avg, a rate consistent with achieving other gov goals to ultimately improve Aus LS

Question 32

Full Employment

Answer 32

Lowest rate of unemployment consistent with low inflation and other gov goals, implying no cyclical unemployment but accepting natural (4.0-4.5%)