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?

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?

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

What do taxes under the Federal insurance contribution act (FICA) fund? Social security and medicare What do social security taxes pay for? benefits to older citizen, surviving family memebers of wage earners, and people with certain disabilities WE WILL WRITE …

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Keynes Keynes argued that the solution to depression was to stimulate the economy (“inducement to invest”) through some combination of two approaches : a reduction in interest rates. Government investment in infrastructure – the injection of income results in more …

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