Market mechanisms — definition?
Economic processes operating through individual choices.
State in liberal theories — role?
Limited to police, justice, defense functions.
Liberal view on intervention — stance?
Illegitimate and disruptive to markets.
Keynesian state role — objective?
Correct market failures and promote welfare.
Welfare state — functions?
Regulates activity, social protection, income redistribution.
Economic policy — goal?
Stabilize economy and foster growth.
Cyclical policy — focus?
Short-term balance of growth, employment, prices.
Structural policy — focus?
Long-term growth, equity, sustainability.
Fiscal policy — main tool?
Government budget decisions on spending and taxes.
Fiscal stimulus — mechanism?
Increases demand via spending, tax cuts, transfers.
Expenditure multiplier — effect?
Spending generates additional income and demand.
Fiscal policy limits — main issues?
Inflation, crowding-out, deficit financing.
Public debt — what?
Total accumulated government borrowing.
Debt dynamics — risk?
Unsustainable debt leads to instability.
EU fiscal rules — example?
Stability and Growth Pact, deficit below 3%.
Escape clause — purpose?
Temporary derogation during severe downturns.
Testez vos connaissances avec un QCM de 8 questions sur Understanding Fiscal Policy and Public Debt.
1. According to liberal economic theories, what is the main criticism of state intervention?
2. What is a key feature of the Keynesian perspective on the role of the state?
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