Ch. 14 gov

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revenues.
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A budget deficit occurs when expenditures exceed
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the 1980s
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Most of today’s federal debt was run up by government borrowing during
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9
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Approximately what percentage of the annual federal budget pays interest on the national debt?
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excise taxes
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Which is NOT a major source of federal revenue?
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the income tax was unconstitutional
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In Pollock v. farmer’s loan and trust co. (1895), the U.S. Supreme Court ruled that
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explicitly permitted Congress to levy an income tax
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The sixteenth amendment, ratified in 1913,
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budget
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A(n) _____ is a policy document allocating taxes and expenditures, or a series of goals with price tags attached.
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a policy document allocating burdens (taxes) and benefits (expenditures)
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A budget is
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Sixteenth Amendment
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Congress was officially given the power to levy an income tax through the
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a policy statement that allocates burdens and benefits by attaching price tags to policy goals
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The federal government’s budget is mainly
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translating financial resources into human purposes
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According to Aaron Wildavsky, budgeting is a process most concerned with
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establishing the annual tax rates that Americans of different incomes must pay
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What is NOT a responsibility of the IRS?
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provide the largest source of federal revenue
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Income taxes
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individual income tax, social insurance receipts, borrowing, and corporate income tax
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In order of decreasing amounts, the sources of federal revenue include
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income taxes which account for much less federal revenue than individual income taxes
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Corporations today pay
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those with more income pay higher rates of tax on their income
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The income tax is generally progressive, meaning that
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paid for by employees and employers
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Social Security taxes are
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are earmarked for a specific purpose
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Social insurance taxes
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Social Security Taxes
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The fastest growing source of federal revenue has been
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selling bonds
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The government borrows money principally by
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financial institutions, citizens, corporations, mutual funds
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Who can purchase US government bonds?
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consists of all the money borrowed over the years by the national government and still outstanding
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The federal debt
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has increased due to the budget deficit caused by the difference between revenues and expenditures
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The federal debt in the US
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its day to day expenses
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Unlike state and local governments, the federal government is borrowing primarily for
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tax expenditures
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_____ are revenue losses attributable to provisions of the federal tax laws which allow a special exemption, exclusion, or deduction.
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tax exemptions, deductions, and exclusions
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Tax expenditures consists of
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tax expenditure
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The federal income tax deduction for mortgage interest on an owner-occupied home is an example of a
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a tax deduction for the mortgage interest paid by homeowners
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An example of a tax expenditure is
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30 percent
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The Office of Management and Budget estimates that the total tax expenditures is more than _____ of the federal government’s total receipts.
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middle and upper income people and corporations
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Tax expenditures tend to most benefit
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Corporate taxes were increased.
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What is false about President Reagan’s 1981 tax cut?
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It provided new tax incentives for personal saving and investment.
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What is true about President Reagan’s 1981 tax cut?
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It increased the number of tax expenditures available to businesses
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What was not a provision of Reagan’s 1985 tax simplification program?
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indexed
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Beginning in 1985, federal income taxes were _____ to the cost of living, so that government no longer got a larger percentage when inflation pushed incomes into higher brackets while the tax rates stayed the same.
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high income families
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President Reagan’s 1981 tax cuts were most beneficial to
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raise the income tax rate for families in the highest income brackets
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In 1993, Congress agreed to president Clinton’s proposal to
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2.75 trillion
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The US government’s annual budget is now approximately
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less
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Compared to most other countries with developed economies, the national, state, and local governments in the US tax
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one of the smallest
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Compared to other western nations, america’s total government expenditure as a percentage of the GDP is
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U.S.
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Which of the following countries have the smallest total tax revenues as a percentage of their gross domestic product?
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Fifty percent.
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The federal budget consumes _____ of America’s GDP
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none
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In order of decreasing amounts, federal expenditures include
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20 percent
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America’s national, state, and local governments spend an amount equal to _____ of the GDP.
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the Department of Defense
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During the 1950s and early 1960s, over half the federal budget was spent every year on
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increase in social service expenditures and decline in defense spending
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From the mid 1960s to the early 1980s, the biggest change in government spending was the
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the close relationship between defense officials and the corporations that supply their hardware needs
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The military industrial complex refers to
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decreased in the 1990s
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The budget of the Department of Defense
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procurement
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The purchasing of military hardware is known as
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income security programs
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The biggest expenditure in the federal budget today is
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1935
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The Social Security Act, which set up the Social Security system, was passed in
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FDR
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The social security act was passed under the administration of president
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Medicare
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In 1965, _____ was added to the social Security programs to provide hospital and physician coverage to the elderly
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provides both hospital and physician coverage to the elderly
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Medicare
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income security expenditures
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The biggest slice of the federal budget pie belongs to
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over 15 percent
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By 1990 the Social Security system was financed by a payroll tax of
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provides small increases in the current budget over the previous year’s budget
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A major feature of incremental budgeting is that it
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giving an agency a little more than it had last year
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An example of incremental budgeting is
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Agencies must justify their entire budget request
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What is not a feature of incremental budgeting?
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Incrementalism
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_____ refers to the concept that in the spending appropriations process, the best predictor of this year’s budget is last year’s budget plus a little bit more.
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incrementalism
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The most prevalent model of budgetary decision making in practice is
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An agency or program must prove it still merits its very existence every year
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What is not associated with incremental budgeting?
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uncontrollable expenditures
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Budget items mandated by a law or by a previous obligation are known as
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entitlement
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Social Security payments are an example of a(n)
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an expenditure that is required by current law or a previous government obligation to people automatically eligible for some benefit
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An “uncontrollable” expenditure in the federal budget is defines as
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uncontrollable expenditures
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Social Security programs, interest on the national debt, and military pensions are examples of
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the Social security system
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The biggest uncontrollable expenditure in the federal budget is
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two thirds
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An estimated ____ of the federal budget is considered uncontrollable, unless Congress changes a law or existing benefit levels.
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two thirds
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Approximately what percentage of the federal budget is uncontrollable?
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Congress
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The ultimate power to determine how much the government will tax and spend, and what it will spend taxes for, lies with
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Ways and Means
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In the House, it is the _____ Committee that writes tax codes, subject to the approval of Congress as a whole.
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they want the almost inevitable budget cuts to be bearable
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Agencies invariably pad their budget requests because
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Finance
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In the Senate, the _____ Committee is responsible for writing tax codes, subject to the approval of Congress as a whole.
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19
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The budget cycle begins in the executive branch _____ months before the fiscal year begins.
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is a presidential appointee requiring approval of the Senate
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The director of the Office of Management and Budget
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Office of Management and Budget
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The ____ is responsible for supervising preparation of the federal budget and advising the president on budgetary matters.
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agencies of the executive branch sent their budget requests to the secretary of the treasury, who forwarded them on to Congress, with the president playing little or no role in the entire process
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Until Congress passed the Budget and Accounting Act of 1921,
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executive agencies
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Before the president submits her budget to congress the OMB coordinates the requests of
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Office of Management and Budget
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The heads of executive agencies send their budget requests to the
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General Accounting Office
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Agencies’ behavior and budgets are audited, monitored, and evaluated for Congress by the
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president
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The Office of Management and Budget parcels out money to government agencies and is accountable to the
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The OMB is one of the few government agencies created by the Constitution (totally false)
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What is false about the OMB?
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the president makes revisions and submits it to Congress
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Once the Office of Management and Budget has prepared the federal budget,
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Congress
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According to the Constitution, all federal appropriations must be authorized by
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The Office of Management and budget
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The Congressional budget and Impoundment control act of 1974 did not set up
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Congress agree on a budget according to a fixed schedule, with target figures for the total budget size
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The Congressional Budget and Impoundment Act of 1974 requires that
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Congressional Budget Office
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The congressional equivalent of the Office of Management and Budget is the
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force Congress to consider the budget as a whole rather than in terms of individual appropriations
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One of the important purposes of the Congressional Budget Act of 1974 is to
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advise Congress on the consequences of its budget decisions
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The main purpose of the Congressional Budget Office is to
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budget resolutions
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To set a limit on total government spending, both houses of Congress are required to pass a(n) _____ every April, binding Congress to a total expenditure level, or bottom line, of all federal spending for all programs.
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sets limits on expenditures based on revenue projections
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A budget resolution

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