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Fiscal policy
The taxation and spending decisions of a government
Inflationary Fiscal Policy
Designed to increase Aggregate Demand
Deflationary Fiscal Policy
Designed to reduce aggregate demand.
Discretionary fiscal policy
deliberate changes in government spending and taxation designed to influence aggregate demand
Automatic stabilisers
forms of government spending and taxation that change automatically to offset fluctuations in economic activity
economic cycle
the tendency for economic activity to fluctuate outside its trend growth rate, moving from a high level of economic activity (boom) to negative economic growth (recession)
Recession
A fall in real GDP over a period of six months or more
Progressive tax
A tax that takes a higher percentage from the income of the rich
Regressive tax
A tax that takes a greater percentage from the income of the poor
Monetary policy
Central bank and /or government decisions on the rate of interest, the money supply and the exchange rate
Supply-side policies
policies designed to increase aggregate supply by improving the efficiency of labour and product markets
Human capital
Education, training and experience that a worker, or group of workers possesses
