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Section 4: Government and the macro economy - Coggle Diagram
Section 4: Government and the macro economy
Chapter 24: Role of government: operate at 3 levels
Local, national, international
Local role: collect taxes, which use in local refunding
National role: how to achieve macroeconomic aims
International role: involves trading between countries, that includes free trade.
Chapter 25: Macroeconomic aims of government
Economic growth: annual increase in level of national output
Unemployment: people are willing to work but unable to find work
Unemployment rate: (unemployed people/labor force)x100
Inflation: sustained rise in general price level in an economy
Balance of payments: financial record of a country's transactions with the rest of the world
Redistribution of income: macroeconomic aim of achieving greater equality in distribution of income
Chapter 26: Fiscal policy
Government budget: financial plan in terms of planned revenue, expenditure.
Budget deficit: government spends more than it collects from revenue
Budget surplus: government has more revenue than it spent.
Direct taxation: tax paid from income, wealth, profit from individuals and firms.
Indirect taxation: tax on goods and services, ex: VAT, Sales tax.
Progressive tax: those with higher ability pay charged a higher tax rate
Regressive tax: those with higher ability to pay charged a lower tax rate
Proportional taxation: Percentage stays the same
Chapter 27: Monetary policy
Monetary policy: manipulation of interest rate, exchange rate, money supply to control spending in the economy
Changes in interest rate: influence level of economic activity
Changes in money supply: