Economic Policies

• What is meant by monetary policy?

  Action that a country‘s central bank or government can take to influence how much money is in the economy and how much it costs to borrow.
• What is meant by supply-side policy?

  Policies that aim to increase productivity and efficiency in the economy. Aim is to boost aggregate supply to result in increased output. In this case, the LRAS shifts to the right and national output levels increase, meanwhile the price level decreases.
• What is meant by fiscal policy?

  The use of government spending and taxation to influence the economy.
• What is meant by demand-side policy?

  A demand-side policy is an economic policy focused o increasing or decreasing aggregate demand to influence unemployment, real output, and the price level in the economy.
• What do demand-side policies include?

  Fiscal policies that involve taxation and/or government spending adjustments.
• What do supply-side policies include?

  In supply-side fiscal policy, tax cuts, lower interest rates and deregulation help foster increased production.
• What is the definition of fiscal policy?

  It is the use of government revenue colleciton and expenditure to influence a country’s economy.
• What do fiscal policy examples primarily include?

  Examples primarilty include changes to levels of taxation and government spending. To stimulate growth, taxes are lowered and spending is increased. This often involves borrowing by issuing government debt. To cool down an overheating economy, taxes may be raised and spending decreased.
• In an overheating economy, what may happen to taxes and spending?

  Taxes may be raised and spending decreased.
• WHat are examples of fiscal policy?

  • subsidies
  • investment
  • taxes
• What is the definition of monetary policy?

  The action a central bank or a government can take to influence how much money is in a country’s economy and how much it costs to borrow.

  A.k.a. A set of actions too control a nation‘s overall money supply and achieve economic growth.
• What are examples of interest rates?

  • interest rates
• What is the definition of bond yield?

  The rate fo interest paid on government debt.
• What is the definition of budget (fiscal) deficit?

  The budget deficit is the difference between what the government receives in revenue and what it spends.
• What is the definition of cyclical fiscal deficit?

  The size of the deficit is influences by the state of the economy: in a boom, tax receipts are relatively high and spending on unemployment benefit is low.
• What is the definition of direct taxation?

  Taxes on income, profits and wealth, paid directly by the bearer to the tax authorities.
• What is the definition of fiscal policy?

  Taxation and spending measures that allow the governmeant to guide the economy.
• What is the definition of indirect taxation?

  Taxes on expenditure (e.g. VAT). They are paid to the tax authorities, not by the consumer, but indirectly by the suppliees of the goods or services.
• What is the definition of national debt?

  Debt is the total amount owed by the governent which has accumulated over the years.
• What is the definition of structural fiscal deficit?

  The structural deficit is the part of the deficit which is not related to the state of the economy. This part of the deficit will not disappear when the economy recovers.
• What are the current government spendings on providing public services?

  • salaries of NHS employees
  • drugs used in health care
  • road maintenance
  • army logistics suppliers
• What are the capital government spending on new public infrastructure?

  • construction of new motorways
  • new equipment in the NHS
  • flood defence schemes
  • extra defence equipment
• What is the importance of government spending?

  • is a key component of aggregate demand
  • has a big Regional Economic impact
  • providing public & merit goods
  • achieving greater equity in society
• What is the economic impact of healthcare spending?

  
  

  • improved health outcomes will boost active labour supply
  • will also increase productivity
  • lessons risks of relative poverty
• What is the economic impact of education spending?

  • may increase the skills and productivity of workers
  • improvement in human capital will lower structural unemployment
  • more innovation/competitiveness
• How can we evaluate the impact of health on the economy?

  1. Better health results can be achieved without increase in health finding.
  2. Will lower income families the improved access?
• How can we evaluate the impact of education on the economy?

  1. Effectiveness of education spending has been questioned.
  2. Money might be better spent targeting certain groups of ages.