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18 Cards in this Set
- Front
- Back
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fiscal policy
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changes in government spending and tax collections designed to achieve a full-employment and noninflationary domestic output
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Council of Economic Advisers (CEA)
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a group of three economists appointed by the president to provide expertise and assistance on the economic matters
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expansionary fiscal policy
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an increases in governemtn purcases of goods and services, a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate demand and expanding real output
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budget deficit
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government spending in excess of tax revenues
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contractionary fiscal policy
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a decrease in government purchases for goods and services, and increase in net taxes, or some combination of the two, for the purpose of decreasing aggregate demand and thus controlling inflation
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budget surplus
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tax revenues in excess of government spending
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built-in stabilizer
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anything that increases the government's budget deficit during a recession and increases its budget surplus during an expansion without requiring explicit action by policymakers
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progressive tax system
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the average tax rate rises with GDP
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proportional tax rate
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the average tax rate remains constant as GDP rises
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regressive tax system
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the average tax rate falls as GDP rises
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standardized budget (full-employment budget)
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used to adjust actual Federal budget deficits and surpluses to account for the changes in tax revenues that happen automatically whenever GDP changes
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cyclical deficit
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simply a by-prodcut of the economy's slide into recession, not the result of discretionary fiscal actions by the government
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political business cycles
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the alleged tendency of Congress to destabilize the economy by reducing taxes and increasing government expenditures before elections and to raise taxes and lower expenditures after elections
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crowding-out effect
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an expansionary fiscal policy may increase the interest rate and reduce investment spending, thereby weakening or canceling the stimulus of the expansionary policy
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U.S. securities
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financial instruments issued by the Federal government to borrow money to finance expenditures that exceed tax revenues
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public debt
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essentially the total accumulation of the deficits (minus the surpluses) the Federal government has incurred through time
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external public debt
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the portion of the public debt owned to foreign citizens, firms and institutions
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public investments
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government expenditures on public capital and on human capital
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