Chap 17 and 18 Flashcards
tax and spending rules that have the effect of slowing down the rate of decrease in aggregate demand when the economy slows down and restraining aggregate demand when the economy speeds up, without any additional change to legislation
automatic stabilizers
when government spending and taxes are equal
balanced budget
when the federal government spends more money than it receives in taxes in a given year
budget deficit
when the government receives more money in taxes than it spends in a year
budget surplus
fiscal policy that decreases the level of aggregate demand, either through cuts in government spending or increases in taxes
contractionary fiscal policy
a tax imposed on corporate profits
corporate income tax
federal spending and borrowing causes interest rates to rise and business investment to fall
crowding out
the government passes a new law that explicitly changes overall tax or spending levels with the intent of influencing the level or overall economic activity
discretionary fiscal policy
a tax on people who pass assets to the next generation-either after death or during life in the form of gifts
estate and gift tax
a tax on a specific good-on gasoline, tobacco, and alcohol
excise
fiscal policy that increases the level of aggregate demand, either through increases in government spending or cuts in taxes
expansionary fiscal policy
the time it takes for the funds relating to fiscal policy to be dispersed to the appropriate agencies to implement the programs
implementation lag
a tax based on the income, of all forms, received by individuals
individual income tax
the time it takes to get a fiscal policy bill passed
legislative lag
or the tax that must be paid on all yearly income
marginal tax rates