Economics SL
4
Chapters
96
Notes
Unit 1 - Intro to Econ & Core Concepts
Unit 2 - Microeconomics
Unit 3 - Macroeconomics
Unit 4 - The Global Economy
Economics SL
Unit 3 - Macroeconomics
Mastering Fiscal Policy: How Government Spending Influences Economy
485 words
3 mins read
Last edited on 5th Nov 2024
Table of content
What's fiscal policy
- Definition: Fiscal policy refers to changes in government spending (G) and taxes (T) to influence the economy.
- Goal: To affect aggregate demand and control inflation, growth, and employment.
- Real-World Example: Think of fiscal policy as the government's "spending-and-taxing remote control." If the economy is sluggish, the government can boost spending on roads or cut taxes like hitting a 'fast-forward' button!
Government expenditures- where does the money go? 💸
- Capital Expenditures: Spending on infrastructure like roads, hospitals, and schools.
- Current Expenditures: Includes salaries and everyday spending like hospital supplies.
- Transfer Payments: Payments like pensions, not included in GDP.
- Real-World Example: Imagine the government as a big spender on a shopping spree, buying roads, paying teachers, and even helping Grandma with her pension!
Government revenues- show me the money! 💰
- Sources: Mostly from direct and indirect taxes, sale of assets, and profits from state-owned enterprises.
- Real-World Example: Think of the government as running a giant lemonade stand. Taxes are like the money from customers, and selling an old lemon-squeezer (privatization) adds to the cash!
Budget talk- surplus, deficit, or balanced? 🧮
- Deficit: When spending > revenue.
- Surplus: When revenue > spending.
- Balanced: When spending = revenue.
- Real-World Example: It's like your piggy bank. If you spend more than your allowance (deficit), you might have to borrow from your brother (public debt)!
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Economics SL
Unit 3 - Macroeconomics
Mastering Fiscal Policy: How Government Spending Influences Economy
485 words
3 mins read
Last edited on 5th Nov 2024
Table of content
What's fiscal policy
- Definition: Fiscal policy refers to changes in government spending (G) and taxes (T) to influence the economy.
- Goal: To affect aggregate demand and control inflation, growth, and employment.
- Real-World Example: Think of fiscal policy as the government's "spending-and-taxing remote control." If the economy is sluggish, the government can boost spending on roads or cut taxes like hitting a 'fast-forward' button!
Government expenditures- where does the money go? 💸
- Capital Expenditures: Spending on infrastructure like roads, hospitals, and schools.
- Current Expenditures: Includes salaries and everyday spending like hospital supplies.
- Transfer Payments: Payments like pensions, not included in GDP.
- Real-World Example: Imagine the government as a big spender on a shopping spree, buying roads, paying teachers, and even helping Grandma with her pension!
Government revenues- show me the money! 💰
- Sources: Mostly from direct and indirect taxes, sale of assets, and profits from state-owned enterprises.
- Real-World Example: Think of the government as running a giant lemonade stand. Taxes are like the money from customers, and selling an old lemon-squeezer (privatization) adds to the cash!
Budget talk- surplus, deficit, or balanced? 🧮
- Deficit: When spending > revenue.
- Surplus: When revenue > spending.
- Balanced: When spending = revenue.
- Real-World Example: It's like your piggy bank. If you spend more than your allowance (deficit), you might have to borrow from your brother (public debt)!
Unlock the Full Content!
Dive deeper and gain exclusive access to premium files of Economics SL. Subscribe now and get closer to that 45 🌟