Macroeconomic policy

• Interventionist policies: Occur when the government intervenes in, and sometimes replaces, free markets.
• Marketisation: Shifting the provision of goods or services from the non-market sector to the market sector.
• Money supply: Stock of money in the economy, composed of cash and bank deposits.
• Bank of England: Central bank in the UK economy, which is in control of monetary policy.
• Natural rate of unemployment (NRU): Unemployment rate when the aggregate labour market is in equilibrium.
• Budget deficit: Achieved when government expenditure exceeds government revenue.
• Proportional taxation: Taxes where the same proportion of income is paid as income rises.
• Contractionary monetary policy: Monetary policy implemented to decrease aggregate demand.
• Budget surplus: Achieved when government revenue exceeds government expenditure.
• Tax threshold: The level above which income tax must be paid.
• Crowding out: When an increase in government spending displaces private spending, with little to no increase in aggregate demand.
• Central bank: Controls the banking system and manages the government's monetary policies.
• Cyclical budget deficit: Part of the budget that tends to rise in economic slumps and fall in economic booms.
• Supply-side improvements: Reforms undertaken by the private sector to enable firms to become more productively efficient.
• Supply-side policies: Use of interventionist policies to encourage efficient markets, thus achieving macroeconomic objectives.
• Expansionary fiscal policy: Fiscal policy implemented to increase aggregate demand.
• Expansionary monetary policy: Monetary policy implemented to increase aggregate demand.
• Indirect tax: A tax on expenditure.
• Deficit financing: Borrowing to finance a budget deficit.
• Deregulation: Removing regulations.
• Equation of exchange: The stock of money in an economy multiplied by the velocity of circulation equals the price level multiplied by real output (MV=PQ).
• Fiscal policy: Use of government spending and taxation to achieve macroeconomic objectives.