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18 Cards in this Set

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