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Chapter 30
Fiscal Policy, Deficits, and Debt
13
Economics
Undergraduate 2
11/22/2010

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Term
Council of Economic Advisers (CEA)
Definition
a group of three economists appointed by the president to provide expertise and assistance on economic matters
Term
expansionary fiscal policy
Definition
used when a recession occurs involves an increase in government spending and a decrease in taxes
Term
contractionary fiscal policy
Definition
help when demand-pull inflation occurs involves decrease in government spending and increase in taxes
Term
budget deficit
Definition
government spending in excess of tax revenues
Term
budget surplus
Definition
tax revenues in excess of government spending
Term
built in stabilizer
Definition
anything that increases the government's budget deficit during a recession and increases its budget surplus during an expansion without requiring explicit action by policy makers
Term
progressive tax system
Definition
tax revenue/ GDP, The more you make the more you are taxed
Term
proportional tax system
Definition
the tax rate remains constant as GDP rises
Term
regressive tax system
Definition
tax rate falls as GDP rises
Term
standardized budget
Definition
adjusts Federal budget deficit or surplus and accounts for changes in tax revenues that happen automatically whenever GDP changes
Term
cyclical deficit
Definition
by-product of economy's slide into recession, not the result of discretionary fiscal actions by the government
Term
external public debt
Definition
enables foreigners to buy some of our output 25% of U.S. debt held by foreign countries
Term
public debt
Definition
total accumulation of the deficits minus the surpluses that the Federal government has incurred through time
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