Economic Terms

Federal Budget

document that states tax collections, spending levels, and allocation of spending

Mandatory Spending

money that gov. is required to spend each year; can't be eliminated (2/3 of budget)

Entitlements

Social Security (unemployment and retirement benefits), Veteran's benefits, Medicare/Medicaid; gov. funds that can't be denied without violating the rights of the claimant

Discretionary spending

part of the budget that is more flexible and can change from year to year (1/3 of budget)

Fiscal year

October 1st - September 30th

Budget resolution

after Congress evaluates budget proposed by president, they respond with this; it is the final determinant - after being signed by the President - on expenditures for the year

Income tax

money collected based on personal income; today it's graduated

Debt

total amount that nation owes

Deficit

how much more we spend than we earn in any given year

Surplus

how much more we have earned than we have spent

Revenue

the money we take in

Excise tax

taxes charged to a domestic producer; ex. gasoline, tobacco, firearms

Office of Management and Budget (OMB)

part of executive branch; assists president with creation of budget

Congressional Budget Office (CBO)

legislative counterpart of OMB; assists congress with creation of budget

Monetarism

belief that inflation occurs when there is too much money chasing too few goods; thus, to control inflation, gov. must control the amount of money in circulation

Keynesianism

belief in an activist gov. to regulate people's ability to spend money; belief that gov. should create programs to help people get jobs in hard times

Economic planning

gov. heavily involved in economy; in times of inflation, set maximum prices for consumer goods and maximum wages (liberal/socialist)

Supply side tax cuts

belief that lower taxes and fewer regulations will stimulate the economy; people will have more money to spend, more incentive to save and invest, businesses will have more money to produce, thus leading to expanded job opportunities (conservative)

Monetary policy

Federal Reserve Board, control money supply through regulation of interest rates

Fiscal policy

refers to economic regulation through controlled taxing and spending