Ch 12 - Deficits and Debt Flashcards Preview

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Flashcards in Ch 12 - Deficits and Debt Deck (26)
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1
Q

fiscal policy

A

the use of government taxes and spending to alter macroeconomic outcomes

2
Q

deficit spending

A

the use of borrowed funds to finance government expenditures that exceed tax revenues

3
Q

budget deficit

A

amount by which government spending exceeds government revenue in a given time period

4
Q

budget surplus

A

an excess of government revenues over government expenditures in a given time period

5
Q

fiscal year (FY)

A

the 12-month period used for accounting purposes; begins October 1 for the federal government

6
Q

discretionary fiscal spending

A

those elements of the federal budget not determined by past legislative or executive commitments

7
Q

fiscal restraint

A

tax hikes or spending cuts intended to reduce (shift) aggregate demand

8
Q

fiscal stimulus

A

tax cuts or spending hikes intended to increase (shift) aggregate demand

9
Q

income transfers

A

payments to individuals for which no current goods or services are exchanged, such as Social Security, welfare, unemployment benefits

10
Q

automatic stabilizer

A

federal expenditure or revenue item that automatically responds counter-cyclically to changes in national income, like unemployment benefits, income taxes

11
Q

cyclical deficit

A

that portion of the budget balance attributable to short-run changes in economic conditions

12
Q

structural deficit

A

federal revenues at full-employment minus expenditures at full-employment under prevailing fiscal policy

13
Q

crowding out

A

a reduction in private-sector borrowing (and spending) caused by increase government borrowing

14
Q

opportunity cost

A

the most desired goods or services that are forgone in order to obtain something else

15
Q

crowding in

A

an increase in private-sector borrowing (and spending) caused by decreased government borrowing

16
Q

national debt

A

accumulated debt of the federal government

17
Q

Treasury bonds

A

promissory notes (IOUs) issued by the US Treasury

18
Q

liability

A

an obligation to make future payment; debt

19
Q

asset

A

anything having exchange value in the marketplace; wealth

20
Q

internal debt

A

US government debt (Treasury bonds) held by US households and institutions

21
Q

external debt

A

US government debt (Treasury bonds) held by foreign households and institutions

22
Q

refinancing

A

the issuance of new debt in payment of debt issued earlier

23
Q

debt service

A

the interest required to be paid each year on outstanding debt

24
Q

optimal mix of output

A

the most desirable combination of output attainable with existing resources, technology, and social values

25
Q

deficit ceiling

A

an explicit, legislated limitation on the size of the budget deficit

26
Q

debt ceiling

A

an explicit, legislated limit on the amount of outstanding national debt