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Economics Unit 4 > Public Sector Finances > Flashcards

Flashcards in Public Sector Finances Deck (6)
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1

Definition of Public sector net borrowing (PNSB)
Definition of Public sector net debt (PSND)

1. Annual difference between net spending and net taxation. The amount the government needs to borrow

2. The total amount of debt that the government owes the private sector- 89.2% of GDP

2

What is cyclical and structural deficit?

Cyclical- during a recession, borrowing increases

Structural- refers to a budget deficit even if we ignore cyclical factors

3

What are automatic fiscal stabilisers?

Looks at how fiscal policy automatically has an influence on the rate of economic growth and help counter swing economic cycles

4

What is discretionary fiscal policy?

A deliberate effort by the government to influence aggregate demand and the rate of economic growth

5

The factors influencing the size of the fiscal deficit? (5)

1. State of the economy
2. Government spending
3. Fiscal policy
4. Demographics- ageing population need pensions
5. Rules on borrowing levels

6

Factors influencing the size of the national debt? (5)

1. Levels of budget deficits in previous years
2. Rate of economic growth
3. Willingness to invest
4. Unexpected events - war
5. Willingness of the private sector to buy government debt