Ch 15 Eco Worksheet – Flashcards
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Fiscal year
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A 12-month period that is used for financial calculations
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Federal budget
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A written document indicating the amount of money the government will receive and spend
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Expansionary policies
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Fiscal procedures that try to increase economic output
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Contractionary Policies
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Fiscal procedures that try to decrease economic output
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Fiscal policy
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The federal government's use of taxing and spending to keep the economy stable
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What is the role of the Office of Management and Budget
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To manage the federal government's budget
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What is the purpose of "stop-gap" funding?
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To keep the gov running when the budget is finished
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Why does the gov sometimes use an expansionary fiscal policy?
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To encourage growth and try to stop or prevent a recession
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Why is it difficult for the federal government to increase or decrease spending?
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Two-thirds of all gov spending is on entitlements, which the gov cannot easily alter
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What is one of the major uses of government fiscal policy?
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To prevent big changes in the level of the GDP
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Keynesian Economics
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The idea that gov can and should regulate economy
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Multiplier Effect
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Every dollar of change in gov use of money is reflected in a greater change in the economy
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Supply-side Economics
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Idea that taxation is a major aspect of the economy
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Classical Economics
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Idea that markets regulate themselves
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What problem did the Great Depression in the 1930s highlight that classical economics did not address
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How long it would take the market to return to equilibrium
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What is the maximum output that the economy can sustain over a period of time called?
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Productive capacity
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What are the two main economic problems that Keynesian economics seeks to address?
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Periods of depression and inflation
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When the gov collects taxes and pays out transfer payments as a way to balance the economy, what are these fiscal tools called?
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Automatic stabilizers
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What does experience show about the relationship of taxation and work?
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A tax cut does not cause workers to work significantly more hours
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What is the current highest bracket for personal income taxes?
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~40%
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Balanced budget
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Federal spending equal to federal revenue
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National debt
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Total amount of money owed by the federal gov
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Treasury bond
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Gov bond that is substantial for as long as 30yrs
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Budget deficit
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Federal spending in excess of federal revenue
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United States Savings Bond
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Gov bond that allows the borrowing of small amounts of money
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When the gov attempts to cover large deficits by creating more money, what is the probable result called?
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Hyperinflation
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What is one of the major problems caused by a large national debt
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It decreases the amount of money available to be borrowed by buisness
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What was the state of the federal budget at the start of the twenty-first century?
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Surpluses for the first time in 30yrs
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What can be expected when members of the baby boom generation begin to retire in large numbers?
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Increased deficits
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What is a major argument against a constitutional amendment requiring a balanced budget
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It would be too inflexible
