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

2022
Views:

379

Pages:

3
Author:

Prerna T

• Fiscal policy: - taxation and spending decisions of a government. Aim is to to influence AD. •reflationvy/expansionvy fiscal policy: -policy measures designed to increase AD deflationary/contractionery fiscal policy: -policy measure -policy measuren designed to reduce AD iscretionary fiscal policy: •Disc - changes and taxation designed to in government spending Influence aggregate denud Automatic stabilisers: -Forms of you spending automatically activity. and taxation that chuge to offset fluctuations stions in economic Economic cycle: - tendency for economic economic activity activ to fluctuate outside its trend growth rate, moving from a high level of economic activity (boom) to negative economic growth (recession). Progressive tax -tax that takes a higher percentage of income from the rich • regressive tax: - tax that takes a greater percentage from the income of the poor. •Monetary policy: - Central bank and lor government decisions. on the rate of interest, the money supply and the exchange rate. Lo influence AD. main component is interotrate. Chage in money supply abo used: ↑ money supply ↑ AD b1f. Tmoney printed Jeasier to lend people will have more to spend. • money supply + interest rate inversely related. -interest mte ↓ exchange rate. Infhtion expected to rive: Consumers: Likely to increase • May borrow their spending now TAD Firms: •↑ Investment before price of cape quipratyo up Workers: Wags ↑ JAS expectations may trigger inflation. Why do we taget 2%. • •Maintain Maintain competitiveness competitivenes with other countries. Prevent snowball effect. (inflationay spiral) Minimal trade off between unemployment and inflation. To control Consumer Avoids deflation. Spending lingest componento/AD.