Q1. Matching the sentences balance budget budget deficit bank of England base rate budget surplus budget Contractionary fiscal policy direct tax Monetary policy expansionary fiscal policy Aggregate demand fiscal policy fiscal stance or budget position neutral fiscal policy indirect tax national debt 1. a statement of spending and income plans by government where spending is equal to its receipts mainly tax revenue. 2. the rate of interest charged by the Bank of England to banks to borrow money overnight. It is the most important interest rates in the UK financial system because it influences other interest rates in the UK such as saving rates and rates of the interest on loans by banks 3. a statement of the spending and income plans of an individual firm or government. The budget is the yearly statement on government spending and taxation plans in the UK. 4. a deficit which arising from government spending is greater than its receipts. Government therefore has to borrow money to finance the difference. 5. a government surplus arising from government spending being less than its receipts. Government can use the difference to repay part of the national debt.6. fiscal policy which leads to a fall in aggregate demand. 7. a tax levied directly on individuals or companies such as income tax or corporation tax 8. fiscal policy which leads to an increase in aggregate demand. 9. the use of taxes, government spending and government borrowing by government to achieve its objective. 10. whether fiscal is expansionary, Contractionary or neutral 11. a tax levied on goods or services, such as value added tax, excise duties or council tax. 12. the total accumulated borrowing of government which remain to be paid to lenders. 13. The total quantity of goods and services that all buyers in an economy (Consumers, Firms. the Government, and Foreigners) want to buy over a particular time period, at different possible price levels. It amounts to GDP 14. An important tool of national governments to influence broad macroeconomic conditions such as unemployment, inflation, and economic growth. Typically, governments alter their monetary policies by changing national interest rates or exchange rates. 15. when changes to government spending and taxation leave the overall budget surplus or deficit unchanged and have no effect on aggregate demand