A tax paid directly to the government such as income or capital gains tax.
A tax paid indirectly to the government. VAT is the most common example, where the business actually pays the tax to government but the consumer also carries the burden in the form of a higher price charged.
Payment owed by an individual, a business, or other entity to the government.
A tax which is based upon an individual’s ability to pay. Involves higher earners facing a higher tax burden than lower earners with a higher marginal tax rate.
A tax which tends to impose a greater financial burden on the lower earners than on higher earners.
An amount of income which is untaxed, designed to support those on low incomes.
Refers to Scottish revenues which do not come from North Sea Oil and Gas production. Largely made up of revenues collected by the Scottish Government, Local Authorities, Public Corporations and the UK Government.
Refers to all offshore oil and gas activity and comes from three sources of revenue: petroleum tax, corporation tax, and licence fees.
Expenditure on day to day running costs. For example, government expenditure on public sector wages, energy or material costs.
Investment expenditure to increase fixed assets. For example, building schools, improving road or transport infrastructure.
Payments from the government to the public. Includes unemployment benefits and welfare spending.
When an increase in wages doesn’t outstrip an increase in prices. Effectively a cut in the purchasing power of wages.
An increase in government spending which seeks to support the economy by increasing demand.
Attempts to decrease government spending by cutting either current, capital or transfer spending.
The process of shifting income, through tax and benefits, from richer to poorer households.
The extent to which government spending supports the economy by increasing GDP.
Relative income level after deducting for taxes (like Income Tax or National Insurance) and adding transfer spending (like Universal Credit).
Exists when government spending exceeds government revenue. Means that the government must borrow money to finance its spending.
Exists when government revenues exceed spending.
An attempt to reduce the deficit so that government spending can be paid for by tax revenues.
Occurs when a budget deficit exists (government spending exceeds revenues). Means that government debt levels increase.
Automatic fiscal stabilisers are automatic measures which dampen the impacts of changes in the business cycle, such as an economic downturn. For example, when the economy enters a recession, there is a decrease in tax revenue and welfare spending increases, softening the impact of the recession.
An annual lump-sum transfer from the UK Government to the Scottish Government. The large “block” of money can be spent in any way the Scottish Government sees fit.
A type of government spending which often increases if government debt or interest rate increases.
The total amount of debt that the government owes. Increases for as long as there is a deficit.
An annual document published by the Scottish Government to provide estimates of total public sector revenue in Scotland and public sector expenditure for Scotland under the current constitutional arrangements.
Powers held in the UK government, and not devolved to the Scottish Government. Includes areas like defence and employment policy.
Powers devolved to the Scottish Government. Includes areas like Health, Education and Social Care.
Tax revenue which is collected directly by the Scottish Government, with no input from the UK Government, such revenue allows the Scottish Government more independence in spending decisions with the aforementioned revenue
A general increase in the price of goods and services across the economy.
Real values are ones which are adjusted for inflation, allows us to understand prices not just in terms of nominal (money) value but in terms of goods and services.
Nominal values are written in money terms and not adjusted for inflation. They are less useful when measuring in terms of real goods and services.
Demand-pull inflation is when demand for goods and services exceeds their supply, leading to an increase in prices.
Cost-push inflation is when the costs of production increase, causing producers to increase prices to maintain their profit margins.
1. Selecting the basket 2. Tracking the prices 3. Calculating the Index
A hypothetical set of consumer products and services, including food, clothing, transportation, medical care, and more. This basket represents typical purchases of an average consumer and is used in the calculation of the CPI.
A measure of the average change in prices over time that consumers pay for a basket of goods and services. It is a key tool for tracking inflation and changes in the cost of living.
Measures the value of activity within an economy in a given timeframe.
The value of a currency in terms of the number of goods or services that one unit can buy. If the number of goods that £1 decreases over a yearly period, then the purchasing power has decreased.
Austerity refers to measures taken by a government aimed at reducing the government deficit, such as tax increases.
An individual is unemployed if they are able and willing to work, but are unable to find suitable job opportunities.
The set of measures the government can undertake to achieve higher economic output, such as increasing spending and decreasing taxation.
This is unemployment which occurs after structural changes to the economy, such as the closure of a sector
An economic measure highlighting a nation’s economic output per person.
The group of workers from which workers can be hired by employers
The 4 stage cyclical pattern of economic expansion and contraction
This is unemployment that occurs as a result of fluctuations in the business cycle or economic activity. During low economic activity, unemployment may rise
Elasticity refers to how reactive an item’s demand is to changes in economic conditions, such as income levels. If a good is very elastic, then demand changes quickly.
A secondary effect is an additional impact of economic activity that is the ‘indirect outcome’ of an action.
If a person is actively seeking work in the previous 4 weeks and ready to work in the next 2 weeks, then they are considered unemployed.
Consumer demand is the desire or willingness of consumers to buy goods or services. It represents the amount of a product or service that consumers are ready to purchase in the market.
The effect felt by workers who remain unemployed for significant periods, whom may feel discouraged from the labour force and miss training/growth opportunities.
Individuals are economically inactive if they are not currently employed, and are not actively seeking employment
Elasticity refers to how responsive the quantity demanded of a product is to changes in price or other factors.
a type of data collected by observing many subjects (such as individuals, firms, countries, or regions) at the one point or period of time.
Time series analysis is a specific way of analysing a sequence of data points collected over an interval of time.
Unemployment rates are calculated as the number of unemployed people divided by the economically active population.
Panel data (or time series cross section) means that we have data from many units (Individuals, countries etc.), over many points in time.
An index shows the development of a number over time. It shows the change of a figure from one point in time to another. The ‘base year’ is usually set to 100. An index value of 110 then indicates an increase by 10 % compared to the value in the reference period.
