CHAPTER 14 2.0 / 5 based on 1 rating ? EconomicsA2/A-levelAQA Created by: hayley ashtonCreated on: 26-02-13 21:12 Direct Taxes? Taxes levied directly on the income of an individual or organisation 1 of 31 Horizontal Equity? When people or firms with the same income and financial circumstances pay the same amount of tax 2 of 31 Vertical Equity? When the amount that people and firms pay is based on their ability to pay 3 of 31 Hypothecation? When taxes are earmarked for a specific purpose 4 of 31 Benefit Principle? The argument taxes should be linked to the benefits received by taxpayers 5 of 31 Progressive Tax? Where the proportion of a person's income paid in tax increases as income increases 6 of 31 Regressive Tax? Where the proportion paid in tax falls as income increases 7 of 31 Proportional Tax? Where the proportion of income paid in tax stays the same as income increases 8 of 31 Capital Expenditure? Government spending to improve the productive capacity of the nation. Eg, on schools and hospitals 9 of 31 Current Expenditure? Government spending on a day to day basis of the public sector, including raw materials and wages of public sector workers 10 of 31 Transfer Payments? Government payments to individuals for which no service is given in return. Eg, state benefits 11 of 31 Balanced Budget? Where government receipts equal government spending in a financial year 12 of 31 Budget Deficit? Where government spending exceeds government receipts in a financial year 13 of 31 Budget Surplus? Where government receipts exceed government spending in a financial year 14 of 31 Fiscal Stance? Whether the government is seeking to increase or decrease aggregate demand through its fiscal policy measures 15 of 31 Neutral Fiscal Stance? Where the government runs a balanced budget 16 of 31 Expansionary Fiscal Policy? Where the government runs a large budget deficit 17 of 31 Contractionary Fiscal Policy? Where the government runs a large budget surplus 18 of 31 Cyclical Budget Deficit? A budget deficit resulting from fluctuations in the economic cycle 19 of 31 Automatic Stabilisers? Features of government spending and taxation that minimise fluctuations in the economic cycle 20 of 31 Structural Budget Deficit? A budget deficit resulting from fundamental changes in the structure of the economy 21 of 31 PSNCR? Public Sector Net Cash Requirement - The difference between government spending and revenue 22 of 31 National Debt? Borrowings of government over successive years 23 of 31 Crowding Out? Where a public sector deficit deters private sector investment and consumption 24 of 31 Golden Rule? The UK government's fiscal rule that net government borrowing should only be to fund infrastructure projects 25 of 31 Sustainable Investment Rule? The fiscal rule that over the economic cycle, public sector debt should not exceed 40% of GDP 26 of 31 Stealth Taxes? Negative term coined by government critics to describe taxes designed to go unnoticed 27 of 31 Foreign Direct Investment? Investments in the domestic economy in new manufacturing plants by foreign multinational companies 28 of 31 Discretionary of Active Fiscal Policy? Deliberate changes in government spending or taxation to influence the economy as a whole 29 of 31 Laffer Curve? Model that shows the theoretical relationship between tax rates and tax revenues 30 of 31 'Welfare to Work'? A series of policies designed to increase incentives to gain employment 31 of 31
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