Demand Management: Fiscal Policy (DP IB Economics: HL)

Text E, Paragraph 1
Public debates in Italy have focused on the country’s rising public debt, with various proposals for reducing the burden on future generations. Some advocate for austerity measures, while others suggest more innovative solutions.

Define the term public debt as indicated in bold (Text E, Paragraph 1).

Text C, Paragraph 2
Governments around the world rely on a variety of revenue sources to finance their operations. Decisions on how to balance these sources are critical to maintaining fiscal stability.

State two sources of government revenue as found in (Text C, Paragraph 2).

Text D, Paragraph 2
Debates over the allocation of transfer payments have dominated political discussions in several countries, particularly regarding support for unemployed and elderly citizens. These payments play a significant role in social welfare.

Define the term transfer payments as indicated in bold (Text D, Paragraph 2).

Text A, Paragraph 3
India’s government has been examining various approaches to curb inflation. The role of fiscal policy in controlling price levels has been a particular focus in recent economic discussions.

Describe how fiscal policy can be used to reduce inflation as indicated in bold (Text A, Paragraph 3).

Text C, Paragraph 3
The concept of a balanced budget has become a contentious issue in South Korea, as policymakers seek to align government revenues and expenditures to ensure fiscal sustainability.

Define the term balanced budget as indicated in bold (Text C, Paragraph 3).

Text D, Paragraph 3
Countries recovering from economic downturns are increasingly turning to expansionary fiscal policy to boost aggregate demand. Analysts are watching closely to see whether these measures will have the desired effect on economic recovery.

Describe the impact of expansionary fiscal policy on aggregate demand as indicated in bold (Text D, Paragraph 3).