Fiscal policy

What the syllabus asks of you

• definition of the government budget
• reasons for government spending The main areas of government spending and the reasons for and effects of spending in these areas.
• reasons for taxation Taxation as the main source of government revenue and the reasons for levying taxation.
• classification of taxes Examples of the different classifications of tax; progressive, regressive, proportional; and direct, indirect.
• principles of taxation The qualities of a good tax.
• impact of taxation The impact of taxation on consumers, producers, government and economy as a whole. Continued Topic
• definition of fiscal policy
• fiscal policy measures The tax and spending changes, in the form of fiscal policy, that cause budget balance or imbalance. Including calculations of the size of a budget deficit or surplus.
• effects of fiscal policy on government How fiscal policy measures may enable the government to achieve its macroeconomic aims. macroeconomic aims Note: aggregate demand and aggregate supply are not required.