Flashcards in Discovery Unit 24 Glossary Deck (11):
One of the two main tools of macroeconomic policy. Set of policies relating to government spending, taxation, and borrowing.
Occurs when tax revenue is greater than spending.
Occurs when tax revenue is less than spending.
Occurs when government spending and taxes are equal.
Accumulation of money, over time, that a government has borrowed but has not yet paid back.
discretionary fiscal policy
Occurs when the government passes a new law that explicitly changes tax or spending levels.
Changes in tax and spending levels that aim to stimulate aggregate demand in a recession and hold down aggregate demand in a potentially inflationary boom, but without the passage of any new laws.
Expansionary fiscal policy
Increases the level of aggregate demand through increases in either government spending or transfer payments, or through reductions in taxes.
The time it takes for policymakers to recognize the existence of an economic expansion or a recession.
Time necessary to put a desired policy into effect once economists and policymakers acknowledge that the economy is in an expansion or a recession.