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Definition
| changes in government spending and tax collections designed to achieve a full-employment and noninflationary domestic output; also called discretionary fiscal policy |
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| Council of Economic Advisers (CEA) |
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| a group of three persons that advises and assists the president of the United States on economic matters (including the preparation of the annual Economic Report of the President) |
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| expansionary fiscal policy |
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| an increase in the government purchases 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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| the amount by which the expenditures of the Federal government exceed its revenues in any year |
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| contractionary fiscal policy |
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Definition
| a decrease in the government purchases for goods and services an increase in the net taxes, or some combination of the two, for the purpose of decreasing aggregate demand and thus controlling inflation |
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| the amount by which the revenues of the Federal government exceed its expenditures in any year |
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| a mechanism that increases governmen'ts budget deficit (or reduces its surplus) during a recession and increases government's budget surplus (or reduces its deficit) during an expansion without any action by policymakers. The tax system is one such mechanism. |
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| a tax whose average tax rate increases as the taxpayer's income increases and decreases as the taxpayer's income decreases |
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Definition
| a tax whose average tax rate remains constant as the taxpayer's income increaes or decreases |
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| a tax whose average tax rate decreases as the taxpayers income increases and increases as the taxpayer's income decreases |
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| a comparison of the government expenditures and tax collections that would occur if the economy operated at full employment throughout the year; the full-employment budget |
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| a Federal budget deficit that is caused by a recession and the consequent decline in tax revenues |
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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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Definition
| a rise in interest rates and a resulting decrease in planned investmnet caused by the Federal government's increased borrowing to finance budget deficits and refinance debt |
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Definition
| the total amount owed by the Federal government to the owners of government securities; equal to the sum of past government budget deficits less government budget surpluses |
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| U.S.Treasury bills, notes, and bonds used to finance budget deficits; the components of the public debt |
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| the portion of the public debt owed to foreign citizens, firms, and institutions |
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