Fiscal policy

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What is demand managment?
Use of Monetry and Fiscal policy to influence agregate demand in a country.
1 of 10
What is meant by expansionary fiscal policy?
a policy of manipulation of governement spending taxation and government borrowing to create economic growth
2 of 10
Give two examples of how fiscal policy could be used to increase AD.
Through increased government spending, and a decrease in income tax.
3 of 10
What is meant by deflationary fiscal policy?
Using fiscal policy to reduce AD, through increased income tax, a decrease in governement spending leading to a decrease in government borrowing
4 of 10
Define discretionary fiscal policy.
When the government chooses to change spending and taxation
5 of 10
What is meant by automatic stabaliser?
when the changes in fiscal policy automatically change due to the state of the economy without the government having a choice.
6 of 10
If the government run a budget deficit- what does this mean and what effect will it have on the economy?
A Budget deficit is when government spending is more than the amount they recieve in tax. this causes rise in AD.
7 of 10
How does the government finance a budget deficit?
Through selling govenremnt bonds through the bank
8 of 10
What is crowding-out?
When government has to borrow so effectively "crowds out" sector as they have less monay avaliable to borrow
9 of 10
list 3 evaluation points for using fiscal policy as a demand managment tool
Time Lag. People don't react as expected. the Scale of the change
10 of 10

Other cards in this set

Card 2

Front

What is meant by expansionary fiscal policy?

Back

a policy of manipulation of governement spending taxation and government borrowing to create economic growth

Card 3

Front

Give two examples of how fiscal policy could be used to increase AD.

Back

Preview of the front of card 3

Card 4

Front

What is meant by deflationary fiscal policy?

Back

Preview of the front of card 4

Card 5

Front

Define discretionary fiscal policy.

Back

Preview of the front of card 5
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