Government Expenditure and Taxation Quiz

A plan outlining a government's expected income (revenue) and spending (expenditure) for a particular year.

A budget where the government's total revenue is equal to its total expenditure.

A budget where the government's total revenue is greater than its total expenditure.

A budget where the government's total revenue is less than its total expenditure.

The money that the government collects from various sources to fund its operations and services.

Income generated from taxes levied on individuals and businesses.

Income from sources other than taxes, such as fees, fines, and government-owned businesses.

A compulsory contribution by individuals or firms to the government, used to finance public services.

A tax structure where everyone pays the same percentage of their income, regardless of how much they earn. Think of it as a flat rate for everyone.

A tax structure where the wealthy pay a higher percentage of their income compared to lower earners. Higher income, higher tax rate.

A tax structure where lower-income earners pay a larger percentage of their income in taxes compared to higher earners. The burden falls heavier on the less wealthy.

Government spending used for daily operations and administrative tasks. Think of it as the cost of running the machinery of government.

Government spending on projects and infrastructure that aim to improve the economy in the long term. This is about building for the future.

Government spending on general administration tasks, such as managing public services and collecting taxes. Making sure everything runs smoothly.

Government spending on social programs like healthcare, education, and welfare. It aims to improve people's lives and well-being.

Government spending on economic projects, like infrastructure and development initiatives. Boosting the economy and creating jobs.

M1 is the narrowest measure of the money supply, representing the most liquid forms of money readily available for transactions.

M2 is a broader measure of the money supply, including M1 and near-money assets that are readily convertible to cash.

M3 is the broadest measure of the money supply, including M2 and less liquid assets that can be readily converted to cash.

Currency refers to physical money issued by the central bank, including banknotes and coins.

Checkable deposits are balances held in bank accounts that can be used to make payments using checks or electronic transfers.

Near monies are financial assets that can be readily converted to cash, such as savings accounts.

The central bank is a key institution in a country's financial system, responsible for managing the money supply and implementing monetary policy.

The central bank plays a crucial role in implementing economic policies set by the government to achieve economic stability.

The central bank is responsible for issuing the national currency and ensuring its value remains stable.

The central bank acts as the government's financial advisor, managing its accounts, receiving taxes, making payments, and handling national debt.

Central banks provide financial services to commercial banks, holding their reserves and serving as a lender of last resort during financial crises.

Central banks aim to keep the economy stable by controlling inflation, unemployment, and interest rates.

The central bank manages the country's gold and foreign currency reserves, influencing exchange rates and balance of payments.

The central bank is responsible for ensuring the banking system is strong and reliable. It keeps cash reserves of commercial banks and acts as a lender of last resort.

The central bank uses various tools to promote economic growth and stability., including controlling interest rates, printing money, and changing reserve requirements for banks.

Monetary policy is a government strategy to manage the money supply and credit conditions in an economy to achieve specific economic objectives.

Expansionary monetary policy aims to increase the money supply in an economy, typically to stimulate economic growth and reduce unemployment.

Contractionary monetary policy restricts the money supply to control inflation by reducing spending and slowing economic growth.

The central bank, acting on behalf of the government, can use various tools, such as lowering interest rates or buying government securities, to increase the money supply and stimulate economic activity.

The central bank can employ tools like raising interest rates or selling government securities to reduce the money supply and curb inflation.

Monetary policy aims to achieve various economic goals, such as price stability (controlling inflation), full employment (maintaining low unemployment), and balance of payments equilibrium (ensuring a stable exchange rate).

Expansionary monetary policy is often employed during a recession to boost economic activity and create jobs, while contractionary monetary policy is used to control inflation.

The specific tools and strategies used to implement monetary policy vary depending on the country's economic situation and objectives.

Fiscal policy refers to the use of government spending, taxes, and debt to influence the economy. It's like using a steering wheel to guide the direction of the economy.

Expansionary fiscal policy is used to boost the economy during a recession or unemployment. It's like giving the economy a shot of adrenaline.

Contractionary fiscal policy is used to slow down the economy during inflation. It's like putting the brakes on a speeding car.

Expansionary fiscal policy involves increasing government spending and reducing taxes. This puts more money in people's pockets, boosting spending and economic activity.

Contractionary fiscal policy involves decreasing government spending and raising taxes. This reduces the money in circulation, slowing spending and inflation.

The primary objectives of fiscal policy are to ensure efficient resource allocation, maintain full employment, promote equitable income distribution, and accelerate economic growth. It's like a multi-faceted approach to overall economic well-being.

The instruments of fiscal policy are government spending, taxation, and public debt. These tools are used to influence economic activity and achieve policy objectives.

Fiscal policy aims to address economic challenges like unemployment, inflation, and economic growth. It's a powerful tool that can help shape the direction of the economy.