Fiscal policy 0.0 / 5 ? EconomicsFiscal policyASEdexcel Created by: Katie PriceCreated on: 20-03-15 12:59 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
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