Economics C15: Fiscal Policy
Terms
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- What is Fiscal Policy?
- The use of government spending & revenue collection to influence the economy
- What is the Federal Budget?
- A plan for the federal government's revenues and spending for the coming year.
- What is a Fiscal Year?
- A twelve-month period that can begin on any date.
- What is the Office of Management and Budget (OMB)?
- Government office that manages the federal budget.
- What is the Congressional Budget Office (CBO)?
- Government agency that provides economic data to Congress.
- What is an Appropriations Bill?
- A bill that sets money aside for specific spending.
- What are Expansionary Policies?
-
Fiscal policies, like higher
spending and tax cuts, that encourage economic growth - What are Contractionary Policies?
- Fiscal policies, like lower spending, and higher taxes tha reduce economic growth.
- What is Classical Economics?
- The idea that free markets can regulate themselves.
- What is Productive Capacity?
- The maximum output that an economy can produce without big increases in inflation
- What is Demand-Side Economics?
- The idea that government spending and tax cuts help an economy by raising demand
- What is Keynesian Economics?
- A form of demand-side economics that encourages government action to increase or decrease demand and output.
- What is the Multiplier Effect?
- The idea that every one dollar of government spending creates more than one dollar in economic activity.
- What is an Automatic Stabilizer?
- A government program that changes automatically depending on GDP and a person's income.
- What is Supply-Side Economics?
- A school of economics that believes tax cuts can help an economy by raising supply.
- What is the Council of Economic Advisors? (CEA)
- A group of three respected economists that advise the President on economic policy.
- What s a Balanced Budget?
- A budget in which revenues are equal in spending.
- What is a Budget Surplus?
- A situation in which the government spends more than it takes in.
- What is Hyperinflation?
- Very high inflation
- What is a Treasury Bill?
- A government bond that is repaid within three months to a year.
- What is a Treasury Note?
- A government bond that is repaid within two to ten years.
- What is a Treasury Bond?
- A government bond that can be issued for as long as 30 years.
- What is the National Debt?
- All the money the federal government owes to bondholders.
- What is the Crowding-Out Effect?
- The loss of funds for private investment due to government borrowing.
- What is "Servicing the Debt"
- Paying the interest on the debt which is ever increasing & those dollars cannot be spent on defense, health care, or infrastructure.
- What is the Budget Enforcement Act of 1990?
- A "Pay-As-You-Go" system that requires Congress to raise enough revenue to cover increases in direct spending so the budget deficit can't grow larger.
- What are two problems with the National Debt?
- 1. It reduces the funds available for businesses to invest 2. The government must pay interest to bondholders = high interest