CHAPTER 14

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Direct Taxes?
Taxes levied directly on the income of an individual or organisation
1 of 31
Horizontal Equity?
When people or firms with the same income and financial circumstances pay the same amount of tax
2 of 31
Vertical Equity?
When the amount that people and firms pay is based on their ability to pay
3 of 31
Hypothecation?
When taxes are earmarked for a specific purpose
4 of 31
Benefit Principle?
The argument taxes should be linked to the benefits received by taxpayers
5 of 31
Progressive Tax?
Where the proportion of a person's income paid in tax increases as income increases
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Regressive Tax?
Where the proportion paid in tax falls as income increases
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Proportional Tax?
Where the proportion of income paid in tax stays the same as income increases
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Capital Expenditure?
Government spending to improve the productive capacity of the nation. Eg, on schools and hospitals
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Current Expenditure?
Government spending on a day to day basis of the public sector, including raw materials and wages of public sector workers
10 of 31
Transfer Payments?
Government payments to individuals for which no service is given in return. Eg, state benefits
11 of 31
Balanced Budget?
Where government receipts equal government spending in a financial year
12 of 31
Budget Deficit?
Where government spending exceeds government receipts in a financial year
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Budget Surplus?
Where government receipts exceed government spending in a financial year
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Fiscal Stance?
Whether the government is seeking to increase or decrease aggregate demand through its fiscal policy measures
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Neutral Fiscal Stance?
Where the government runs a balanced budget
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Expansionary Fiscal Policy?
Where the government runs a large budget deficit
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Contractionary Fiscal Policy?
Where the government runs a large budget surplus
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Cyclical Budget Deficit?
A budget deficit resulting from fluctuations in the economic cycle
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Automatic Stabilisers?
Features of government spending and taxation that minimise fluctuations in the economic cycle
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Structural Budget Deficit?
A budget deficit resulting from fundamental changes in the structure of the economy
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PSNCR?
Public Sector Net Cash Requirement - The difference between government spending and revenue
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National Debt?
Borrowings of government over successive years
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Crowding Out?
Where a public sector deficit deters private sector investment and consumption
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Golden Rule?
The UK government's fiscal rule that net government borrowing should only be to fund infrastructure projects
25 of 31
Sustainable Investment Rule?
The fiscal rule that over the economic cycle, public sector debt should not exceed 40% of GDP
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Stealth Taxes?
Negative term coined by government critics to describe taxes designed to go unnoticed
27 of 31
Foreign Direct Investment?
Investments in the domestic economy in new manufacturing plants by foreign multinational companies
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Discretionary of Active Fiscal Policy?
Deliberate changes in government spending or taxation to influence the economy as a whole
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Laffer Curve?
Model that shows the theoretical relationship between tax rates and tax revenues
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'Welfare to Work'?
A series of policies designed to increase incentives to gain employment
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Other cards in this set

Card 2

Front

Horizontal Equity?

Back

When people or firms with the same income and financial circumstances pay the same amount of tax

Card 3

Front

Vertical Equity?

Back

Preview of the front of card 3

Card 4

Front

Hypothecation?

Back

Preview of the front of card 4

Card 5

Front

Benefit Principle?

Back

Preview of the front of card 5
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