Discovery Unit 24 Glossary Flashcards Preview

Discovery Economics > Discovery Unit 24 Glossary > Flashcards

Flashcards in Discovery Unit 24 Glossary Deck (11):

fiscal policies

One of the two main tools of macroeconomic policy. Set of policies relating to government spending, taxation, and borrowing.


budget surplus

Occurs when tax revenue is greater than spending.


budget deficit

Occurs when tax revenue is less than spending.


balanced budget

Occurs when government spending and taxes are equal.


Government debt

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.


automatic stabilizers

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.


Recognition lag

The time it takes for policymakers to recognize the existence of an economic expansion or a recession.


Administrative lag

Time necessary to put a desired policy into effect once economists and policymakers acknowledge that the economy is in an expansion or a recession.


Operational lag

The time between the implementation of a fiscal action and when that action affects output, employment, or the price level.