17 Flashcards
What is public finance?
role of government in the economy, spending and revelue collection
What is mandatory spending?
payments for programs with set eligibility aand benefit formulas
social security, medicare/medicaid, income security, federal civilian and military retirement
What is discretionary spending?
spending that lawmakers control annually
defense and non defense (transportation, education, administration of justice, environment, science/space/tech, international affairs
What is net interest?
interest spent to holders of US debt
What is the largest category of federal spending?
mandatory
What is the largest single program of federal spending?
medicaid and medicare
How has the composition of the federal budget shifted over time?
idk goood luck babe
Where do federal revenues come from? In what order?
Individual income tax, social security and medicare taxes, corporate income tax
What is the difference between average and marginal tax rates?
Marginal tax: how much tax is owed on the next additional dollar of income
Average tax: total tax/total income
What is a budget deficit?
spending surpasses revenue
What is a budget surplus?
revenue surpasses spending
What is balanced budget?
revenue = spending
What is federal debt held by the public?
domestic?
How large is federal debt held by the public relative to the size of the economy?
2/3
If nothing changes under current law what is the trajectory for future U.S. federal debt? Why?
increase defecits due to rising interest, aging population, rising health care costs
What are the consequences of a high and rising federal debt?
slower economy, fiscal crisis, exposure to foreign holders, erode confidnece, limit response ability, more vulnerable
