Principles of Macroeconomics, Chapter 9 with class terms and definitions

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fiscal( policy)
the government’s spending and taxing policies
monetary( policy)
the behavior of the Federal Reserve concerning the nation’s money supply
discretionary fiscal( policy)
changes in taxes or spending that are the result of deliberate changes in government policy
net taxes (T)
taxes paid by firms and households to the government minus transfer payments made to households by the government
disposable income (after-tax income) (Yd)
total income minus taxes (Yd = Y – T)
budget deficit
the difference between what a government spends and what it collects in taxes in a given period (G – T)
government spending multiplier
the ratio of the change in the equilibrium level of output to a change in government spending (1/MPS)
tax multiplier
the ratio of the change in the equilibrium level of output to a change in taxes ( -(MPC/MPS) )
balanced budget multiplier
ratio of change in equilibrium output to a change in government spending when G is balanced by a change in taxes so as not to create a deficit
federal debt
the total amount owed by the federal government
privately held federal debt
the privately held debt of the U.S. Government
automatic stabilizers
revenue and expenditure items in the federal budget that automatically change with the state of the economy in such a way as to stabilize GDP
fiscal drag
the negative effect on the economy that occurs when average tax rates increase because taxpayers have moved into higher tax brackets during expansion
full employment budget
what the federal budget would be if the economy were producing at the full-employment level of output
structural( deficit)
the deficit that remains at full employment
cyclical( deficit)
the deficit that occurs because of a downturn in the business cycle
lump sum( taxes)
Taxes that don’t depend on the taxpayer’s income
proportional( tax)
at higher incomes, tax rate is constant
progressive( tax)
at higher incomes, tax rate is higher
regressive( tax)
at higher incomes, tax rate is lower
deficit spending
government spending is greater than government revenue in a given year
Categories: Macroeconomics