Chapter 13

Front 1

Governmenttransfers

Back 1

payments bythe government to householdsfor which no good or service is provided in return

Front 2

Socialinsurance programs

Back 2

government programs (transferpayments) intended to protect families againsteconomic hardship.

Front 3

Government purchases

Back 3

National defense and education arethe biggest categories.

Front 4

Government transfers

Back 4

Social Security, Medicare andMedicaid are the biggest programs.

Front 5

Fiscalpolicy

Back 5

the use oftaxes, government transfers, or government purchasesof goods and services to shift the aggregatedemand curve.

Front 6

Expansionaryfiscal policy

Back 6

fiscal policythat increases aggregate demand:

Front 7

Examples of Fiscal Policy:

Back 7

an increase in governmentpurchases of goods and services, a cut in taxes, an increase in governmenttransfers

Extra fuel in the economy (close a recessionary gap)

Front 8

Contractionaryfiscal policy

Back 8

fiscalpolicythat decreases aggregate demand

Front 9

Examples of concretionary fiscal policy

Back 9

a reduction in governmentpurchases of goods and services, an increase in taxes, a reduction in governmenttransfers

Breaks for the economy (close Expansionary gap)

Front 10

the multiplier is

Back 10

1/(1 − MPC)

Front 11

lump-sumtaxes

Back 11

taxes that don’t dependonthe taxpayer’s income. (sales tax)

Front 12

Automaticstabilizers

Back 12

government spending and taxationrules that cause fiscal policy to beautomaticallyexpansionarywhen the economy contractsand automatically contractionary whenthe economy expands (unemployment insurance).

Front 13

discretionaryfiscal policy

Back 13

arises from deliberateactions by policy makers rather than rules(the Obama stimulus).

Front 14

cyclicallyadjusted budget balance

Back 14

an estimate of the budget balanceif the economy were at potential output.

Front 15

deficit

Back 15

the difference between the amountof money a government spends and the amount it receives in taxes over a given period.

Front 16

debt

Back 16

is the sum of money a government owes at a particular time.

Front 17

Implicitliabilities

Back 17

spending promises madeby governments that are effectivelya debt despite thefact that they are notincluded in the usual debtstatistics

Front 18

Congressional BudgetOffice projections

Back 18

The aging population plus risinghealth care costs will soon pose real problems for thefederal budget.