Chapter 4 Flashcards
Budget Analysis and Deficit Financing
Debt
The amount that a government owes to those who have loaned it money.
Deficit
The amount by which a government’s spending exceeds its revenues in a given year.
Entitlement Spending
Mandatory funds for programs for which funding levels are automatically set by the number of eligible recipients, not the discretion of Congress.
Discretionary Spending
Optional spending set by appropriation levels each year, at Congress’s discretion.
Balanced Budget Requirement (BBR)
A law forcing a given government to balance its budge each year (spending = revenues).
Ex Post BBR
A law forcing a given government to balance its budget by the end of each fiscal year.
Ex Ante BBR
A law forcing either the governor to submit a balanced budget or the legislature to pass a balanced budget at the start of each fiscal year, or both.
Real Prices
Prices stated in some constant year’s dollars.
Nominal Prices
Prices stated in today’s dollars.
Consumer Price Index (CPI)
An index that captures the change over time in the cost of purchasing a “typical” bundle of goods.
Automatic Stabilizers
Automatic reductions in revenues and increases in outlays when the economy shrinks relative to its potential.
Cyclically Adjusted Budget Deficit
A measure of the government’s fiscal position if the economy were operating at full potential GDP.
Cash Accounting
A method of measuring the government’s fiscal position as the difference between current spending and current revenues.
Capital Accounting
A method of measuring the government’s fiscal position that accounts for changes in the value of the government’s net asset holdings.
Static Scoring
A method used by budget modelers that assumes that government policy changes only the distribution of total resources, not the amount of total resources.
