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