BASIC Macroeconomics IDEAS

Question 1

current spending

Answer 1

spending on the running costs of the public sector (e.g. unemployment benefit)

Question 2

capital spending

Answer 2

spending on infrastructure project

Question 3

transfer spending

Answer 3

consist of transfer payments and involves spending on welfare
(e.g. salaries for government employees)

Question 4

Budget deficit

Answer 4

government spending exceeds tax revenue in one year, national debt increases

Question 5

budget surplus

Answer 5

tax revenue exceeds government spending this year, national debt decreases

Question 6

National debt

Answer 6

the total debt owed by a nation’s government

Question 7

Internal debt

Answer 7

owed to lenders within the country

Question 8

external debt

Answer 8

owed to foreign lenders

Question 9

Main government objective

Answer 9

GUILT

Growth
Unemployment
Inflation
Living standard
Trade (balance of payments)

Question 10

Other government objectives

Answer 10

BIPEDE

Budget balance
International competitiveness
Public service access
Exchange rate sustainability
Distribution of income and wealth
Environmental sustainability