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| Question | Answer |
| Fiscal policy | The use of government spending, taxation and the government's budgetary position to achieve the government's policy objectives. |
| Taxation | Compulsory levies charged by central and local government to raise revenue, primarily to finance government spending. |
| Progressive tax | When the proportion of income paid in tax rises as income increases. |
| Regressive tax | When the proportion of income paid in tax falls as income increases. |
| Proportional tax | When the proportion of income paid in tax stays the same as income increases. |
| Principles of taxation | Criteria for judging whether a tax is good or bad. AKA canons of taxation. |
| Balancing the budget | Government spending = government revenue |
| Budget deficit | Government spending > government revenue |
| Budget surplus | Government spending < government revenue |
| Cyclical budget deficit | The part of the budget deficit which rises in the downswing of the economic cycle and falls in the upswing of the cycle. |
| Structural budget deficit | The part of the budget deficit which is unaffected by the economic cycle, instead resulting from structural change in an economy affecting the government's finances. |
| Supply-side policies | Government economic policies which aim to make markets more competitive and efficient, increase production potential, and shift LRAS to the right. |
| Office for Budget Responsibility | Advisory public body that provides independent economic forecasts and analysis of public finances as background to the preparation of the UK budget. |
| National debt | The amount of accumulated debt, resulting from past government borrowing, that is owed by the UK government. This may be to UK or overseas institutions and residents. |
| Supply-side improvements | Reforms undertaken by the private sector to increase productivity so as to reduce costs and to become more efficient and competitive. Supply-side improvement often results from more investment and innovation, often undertaken without government prompts. |
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