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18 Cards in this Set
- Front
- Back
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Recessionary Gap
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The increase inexpenditures required to reach potential GDP
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Inflationary Gap
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The decrease inexpenditures required to get back to potential GDP.
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Descretionary Fiscal Policy
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Government decisions to expand or contract spending and taxes to manipulate AD.
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Fiscal Policy tools
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Government taxes and government spending
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Expansionary Fiscal Policy
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Taxing and Spending to increase AD (taxes down, spending up)
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Contractionary Fiscal Policy
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Taxing and Spending to decrease AD (taxes up, spending down)
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Fiscal Deficit
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When the government spends more than it collects in taxes (in one year)
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Government Debt
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The total amount of money the government owes to others (banks or citizens).
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Laffer Curve
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A curve showing the relationship between tax revenue and tax rate---bends backwards.
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Transfer Payments
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A payment to one person that is funded by taxing others
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Progressive Tax
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A tax whose rate rises as income increases
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Flat (Proportional Tax)
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A tax whose rate is contant visa vis income
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Regressive Tax
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A tax whose rate increases as income decreases
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VAT
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Value Added Tax--an indirect tax on the sale of goods and services
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Liberalization
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Reduction of the rules governing how people and firms may use their private property
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Privatization
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Selling of government firm to private individuals
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Thatcher and Reagan
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Leaders of UK and US in the 1980s--lead the supply side revolution
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Supply Side Econnomics
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A body of economic theory that argues for less government (taxes and spending) as a solution to macroeconomic difficulties
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