Team Alpha
when gov spending is lower than revenue in a given year.
A fiscal surplus (or budget surplus)
a tax levied directly on the income, wealth, or profits of individuals and businesses.
A direct tax
the total borrowing of the gov which remains to be paid to lenders.
National debt
it aims to reduce the fiscal deficit and restore market confidence in public finances. It includes that the gov cuts public spending and/or raises taxes. This can decrease the national debt.
Fiscal austerity
The budget deficit that would exist if the economy were at full employment and growing at its long-run trend rate.
Structural deficit
usually caused by (aggregate) demand deficiency. It occurs because gov spending and tax changes around the economic cycle.
A cyclical deficit
a tax where the proportion of income paid in tax falls as the income of the taxpayer rises.
A regressive tax
Interest paid on the National Debt by the gov.
Debt interest
the use of legal methods to minimize the amount of income tax owed by an individual or a business.
Tax avoidance
the deliberate manipulation of gov expenditure and taxes to influence the economy. It includes expansionary and deflationary policies.
Discretionary fiscal policy
Payments by gov for which there is no goods and services traded.
Transfer payment
total tax paid divided by income.
Average rate of (income) tax
fairness between different generations
Intergenerational equity
General gov final consumption plus transfer payments and debt interest.
Current expenditure
the negative impact that government spending can have on private investment. It suggests that when the government spending rises, it will increase the demand for goods and services, which can lead to higher interest rates and inflation. This can reduce the level of private investment.
Crowding out