University:
London School of Economics and Political Science
Course:
L400 | International Social and Public Policy
Academic year:

2022
Views:

388

Pages:

1
Author:

Prerna T

Define: 1. Distribution of income: How income is shared out between households in an economy. 2. Transfer payments: Money transferred from one group/person to another in return for no goods or services. 3. Saving: Real disposable income that is not spent on consumer products. 4. Dis-saving: Spending more than real disposable income. 5. Overheating: When growth in AD is greater than growth in AS, causing inflation. Distinguish between: In contrast: 1. investment and consumption: Investment is spending on capital goods, while consumption is spending on consumer goods. 2. fiscal deficit and current account deficit: Fiscal deficit is when government spending exceeds tax revenue. Current account deficit means more imports than exports. 3. leakages and injections: Leakages are withdrawals of spending from the circular flow (saving, taxes, imports). Injections are inputs of spending into the circular flow (investment, government spending, exports). 4. SRAS and LRAS: SRAS is short-run aggregate supply, while LRAS is long-run aggregate supply. 5. Disinflation and deflation: Disinflation is a sustained fall in the price level. Deflation is a persistent rate of inflation falling below zero. 6. Automatic and discretionary fiscal policy: Automatic fiscal policy is government spending and taxation that changes automatically to offset changes in economic activity. Discretionary fiscal policy is deliberate changes in government spending and taxation to influence AD. 7. Progressive and regressive tax: Progressive tax is a higher percentage of income from the rich, while regressive tax is a higher percentage of income from the poor.