Chapter 12 Flashcards
(8 cards)
What happens when a state runs a deficit?
A state is spending more than it receives in taxes over a year.
What is the federal debt?
The total amount that the state owes.
How do federal loans relate to the federal debt?
States spend more than they tax through selling bonds. So, the federal debt is the number of outstanding bonds.
Why is the net public debt more relevant than the federal debt?
Because the state could owe money to itself, the net public debt only counts what the state owes to others.
What types of scoring does the Congressional Budget Office use?
Static scoring–if taxes increase, spending won’t change and dynamic scoring– forecasting changes by looking at past changes.
What are the U.S. government’s “I.O.U.”s?
Trust funds, including Social Security, Medicare and Medicaid
What is Hauser’s Law?
No matter how tax rates go, tax revenue stays at around 17-18%
Friedman thought that if a government leader was to improve the economy, she should advocate reforms in
spending, taxes, or deficits.
