Role of the Government 0.0 / 5 ? EconomicsRole of the GovernmentIGCSECIE Created by: Imogenbn99Created on: 27-10-15 10:30 Aggregate Demand Total demand in the economy (expenditure + exports + investment + government spending) 1 of 13 Aggregate supply Total supply in the economy 2 of 13 Balanced budget Government income = Government expenditure 3 of 13 Budget Deficit Government expenditure is greater than its income for that year 4 of 13 Budget surplus Government income is great than expenditure 5 of 13 Direct tax Taxation on income and wealth (income tax, inheritance tax, capital gains tax) 6 of 13 Fiscal Policy Use of taxation and government spending to influence the economy 7 of 13 Indirect taxes Taxation on spending (VAT, taffifs) 8 of 13 Interest Rates Cost of borrowing or reward for saving money, Base rate set by the central bank. 9 of 13 Monetary Policy Use of interest rates or the money supply to influence the economy 10 of 13 Progressive taxes Taking a higher percentage of income as tax from higher earners. Usually implemented through direct tax 11 of 13 Regressive taxes Taking a higher percentage of income from lower income. Usually associated with indirect taxes 12 of 13 Taxation Form of income for the government through direct and indirect charges. 13 of 13
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