Chapter 10

Question 1

federal budget

Answer 1

an annual plan outlining proposed revenues and expenditures for the coming year

Question 2

mandatory spending

Answer 2

spending authorized by law that continues without the need for annual approvals of Congress

Question 3

Discretionary Spending

Answer 3

programs that must receive annual authorization

Question 4

Steps to Establish the Federal Budget (4)

Answer 4

• Executive Formulation
• Action by the House
• Action by the Senate
• Final Approval

Question 5

Executive Formulation

Answer 5

president establishes the general budget guidelines for a multiyear period

Question 6

federal budget deficit

Answer 6

an excess of expenditures over revenues

Question 7

federal budget surplus

Answer 7

budget that shows a positive balance after expenditures are subtracted from revenues

Question 8

Action by the House

Answer 8

Congress has the power to approve, modify, or disapprove the president’s proposed budget

Question 9

appropriations bill

Answer 9

an act of Congress that allows federal agencies to spend money for specific purposes

Question 10

Action by the Senate

Answer 10

Senate can approve the bill or draft its own version

Question 11

Final Approval

Answer 11

Congress sends compromised bill and then sends it to the president

Question 12

Major Spending Categories (6)

Answer 12

• Social Security
• Department of Defense
• Income Security
• Medicare
• Medicaid
• Occupational Safety and Health Administration

Question 13

Medicaid

Answer 13

a joint federal-state medical insurance program for low income people

Question 14

Occupational Safety and Health Administration

Answer 14

monitors occupational safety and health in the workplace

Question 15

balanced budget amendment

Answer 15

a constitutional amendment that requires that annual spending does not exceed revenues

Question 16

State Government Expenditures (5)

Answer 16

• intergovernmental expenditures
• public welfare
• retirement and insurance funds for state employees
• higher education
• highway construction and road improvement

Question 17

Local Government Expenditures (7)

Answer 17

• elementary and secondary education
• public utilities
• hospitals
• police department
• highways, universities, and gov’t buildings
• public welfare
• housing and community development

Question 18

deficit spending

Answer 18

spending in excess of revenues collected

Question 19

federal debt

Answer 19

total amount borrowed from investors to finance the government’s deficit spending

Question 20

balanced budget

Answer 20

an annual budget in which expenditures equal revenues

Question 21

trust funds

Answer 21

special accounts used to fund specific types of expenditures like Social Security & medicare

Question 22

crowding-out effect

Answer 22

the higher-than-normal interest rates that heavy gov’t borrowing causes

Question 23

Gram-Rudman-Hollings

Answer 23

failed because it could get around the law by enacting passed bills 2-3 years later and the economy started to decline during that time

Question 24

Budget Enforcement Act of 1990

Answer 24

enacted the “pay-as-you-go” provision, which was a requirement that new spending proposals or tax cuts must offset by reductions elsewhere

Question 25

Omnibus Budget Reconciliation Act of 1993

Answer 25

reduced only the rate of growth of the deficit

Question 26

line item veto

Answer 26

the power to cancel specific budget items without rejecting the entire budget

Question 27

spending caps

Answer 27

legal limits on annual discretionary spending

Question 28

entitlements

Answer 28

broad social programs that use established eligibility requirements to provide health, nutritional, or income supplements to individuals