Chapter 26 Federal Budget And Public Policy Flashcards
Budget agreements that allow agencies in the absence of an approved budget to spend at the rate of previous years budget
Continuing resolution
A congressional agreement about total outlays spending by major category and expected revenues it guides spending and revenue decisions by the many congressional committees and subcommittees
Budget resolution
Guaranteed benefits for those who qualify for government transfer program such as Social Security and Medicare
Entitlement programs
Budget philosophy prior to the great depression aimed at matching annual revenues with outlays especially during times of war
Annually balanced budget
A bunch of philosophy calling for budget deficits during recessions to be financed by budget surpluses during expansion
Cyclical balanced budget
A budget philosophy using fiscal policy to achieve the economies potential GDP rather than balancing budgets either annually or over the business cycle
Functional finance
The displacement of interest sensitive private investment that occurs when high government deficits drive up market interest rate
Crowding out
The potential for government spending to stimulate private investment in an otherwise dead economy
Crowding in
The net accumulation of federal budget deficit
National debt
A limit on the total amount of money the federal government can legally borrow
Debt ceiling
In a recession a budget deficit will automatically…
Increase because tax revenues decrease
Which budget philosophy advocates ensuring that the economy reaches its potential output?
Functional finance
What is a major problem with the implementation of functional finance?
Chronic deficits accumulate into national debt that at some point could cripple and economy
The observation that larger budget deficits can bring higher interest rates which bring correspondingly larger trade deficit
Twin deficits
