Summary
Edexcel Economics A Fiscal Policy Summary
- Course
- Institution
Edexcel Economics A Fiscal Policy Summary with relevant diagrams, real world examples. Includes definitions, clear explanations of all concepts and evaluations.
[Show more]
Seller
Follow
aliceland
Reviews received
Content preview
YEAR 13 A LEVEL EDEXCEL ECONOMICS A FISCAL POLICY RESEARCH PROJECTFiscal Policy = government policy associated with taxing and spending to influence economic
activity.
Keynes economists: govt changing levels of taxes and expenditure influences AD and level of
economic activity. Therefore, can be used a ‘stabiliser’ throughout economic cycle.
Two main instruments of fiscal policy:
1. Level and composition of tax
2. Changes in govt spending
Government’s fiscal stance
Main three components of govt tax revenue:
1. Income tax (estimated £208bn in 2020)
2. VAT (£161bn)
3. National Insurance contributions (£150bn)
Main three components of govt expenditure:
1. Social protection (estimated £285bn in 2020)
2. Health (£178bn)
3. Education (£116bn)
Forecasted spending for 2020: £928bn Forecast tax revenue for 2020: £873bn (pre-Covid)
forecasted budget deficit of £55bn. (now forecasted to be £300bn due to pandemic).
A budget deficit (T-G < 0) represents an injection into the circular flow of income and will
therefore shift the AD curve rightwards/slow down a leftward shift of the AD curve.
o Paid for by borrowing money (referred to as Public Sector Net Cash Requirement in
UK)
o Only in three periods in past 50 years has there been a budget surplus PSNCR
negative so govt could reduce national debt (Public Sector Net Debt)
o PSND = total stock of accumulated debt of present and past govt added to by
budget deficit, can be reduced by budget surplus.
o Balanced budget T = G i.e. T – G = 0
MAR Day of The Budget: Chancellor of Exchequer forecasts G and T for the financial year
(6th April – 5th April next year)
NOV Autumn Statement: Chancellor updates initial Budget plans + announces govt spending
plans for the financial year.
Fiscal Policy and Aggregate Demand
Fiscal policy to shift AD = discretionary fiscal policy
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller aliceland. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.89. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53068 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now