Summary Fiscal Policies: A* A-level notes

Fiscal Policy


977lt
particularly when Monetary Policy is less effective
Fiscal stimulus
Fiscal
tightening
To control Balance of
Payments International trade
EqualityEquity
redistribution of income

To correct market failures
Soundgovernmentfinances budgetdeficitsurplus
Provision ofpublic services
Defence

Improveproductivepotential


Governmentspending Tax revenue

stance ADI
expansionary
Budget deficit
G T multiplier
Governmentspending Tax revenue

Contraction stance ADI
Budget surplus
G T multiplier

, Governmentspending Tax revenue




Cyclicaldeficits
budget deficit dictated by
economic
cycle

Диета
Income Тах геление I
NICs I
VAT recent I
Duties I

Import duties 1
Unemployment benefits 1
Other healthcare I
spending eg

Automatic stabiliser flaring a boom to avoiddeep
recovery
recession


Fiscal
drag

more income tax revenue Less welfare benefits
Economy recovers
contraction stance ADgrowth slowsdown risk ofhysteresis
any
Structural deficits
deficit that caused deliberategovernment actions
is
by
deficit that exists during the full went
upto
not dictated by the economic cycle