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Ch 15 Eco Worksheet

Fiscal year
A 12-month period that is used for financial calculations
Federal budget
A written document indicating the amount of money the government will receive and spend
Expansionary policies
Fiscal procedures that try to increase economic output
Contractionary Policies
Fiscal procedures that try to decrease economic output
Fiscal policy
The federal government’s use of taxing and spending to keep the economy stable
What is the role of the Office of Management and Budget
To manage the federal government’s budget
What is the purpose of “stop-gap” funding?
To keep the gov running when the budget is finished
Why does the gov sometimes use an expansionary fiscal policy?
To encourage growth and try to stop or prevent a recession
Why is it difficult for the federal government to increase or decrease spending?
Two-thirds of all gov spending is on entitlements, which the gov cannot easily alter
What is one of the major uses of government fiscal policy?
To prevent big changes in the level of the GDP
Keynesian Economics
The idea that gov can and should regulate economy
Multiplier Effect
Every dollar of change in gov use of money is reflected in a greater change in the economy
Supply-side Economics
Idea that taxation is a major aspect of the economy
Classical Economics
Idea that markets regulate themselves
What problem did the Great Depression in the 1930s highlight that classical economics did not address
How long it would take the market to return to equilibrium
What is the maximum output that the economy can sustain over a period of time called?
Productive capacity
What are the two main economic problems that Keynesian economics seeks to address?
Periods of depression and inflation
When the gov collects taxes and pays out transfer payments as a way to balance the economy, what are these fiscal tools called?
Automatic stabilizers
What does experience show about the relationship of taxation and work?
A tax cut does not cause workers to work significantly more hours
What is the current highest bracket for personal income taxes?
~40%
Balanced budget
Federal spending equal to federal revenue
National debt
Total amount of money owed by the federal gov
Treasury bond
Gov bond that is substantial for as long as 30yrs
Budget deficit
Federal spending in excess of federal revenue
United States Savings Bond
Gov bond that allows the borrowing of small amounts of money
When the gov attempts to cover large deficits by creating more money, what is the probable result called?
Hyperinflation
What is one of the major problems caused by a large national debt
It decreases the amount of money available to be borrowed by buisness
What was the state of the federal budget at the start of the twenty-first century?
Surpluses for the first time in 30yrs
What can be expected when members of the baby boom generation begin to retire in large numbers?
Increased deficits
What is a major argument against a constitutional amendment requiring a balanced budget
It would be too inflexible

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