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Econ Ch.13
Federal Budgets and Public Policy
11
Economics
Undergraduate 2
10/21/2011

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Term
Federal Budget
Definition
Plan for fed. go. outlays and revenues for a specified period, usually a year
Term
Budget Resolution
Definition
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
Term
What does deficit do in short/long run
Definition
Short: stimulates aggregate demand
Long: Impedes economic growth because of reduced saving
Term
What does surplus do in short/long run?
Definition
Short: Reduces aggregate demand
Long: Economic growth because of more domestic saving
Term
Continuing resolutions
Definition
Budget agreements that allow agencies, in absence of an approved budget, to spend at the rate of the previous year's budget
Term
Entitlement Programs
Definition
Guranteed benefits for those who qualify for gov. transfer programs such as Social Security and Medicare
Term
Annually balanced budget
Definition
Budget philosophy prior to Great Depression; aimed at matching annual revenues with outlays, except during times of war
Term
Cyclically balanced budget
Definition
Budget philosophy calling for budget deficits during recessions to be financed by budget surpluses during expansions
Term
Functional finance
Definition
Budget philosophy using fiscal policy to achieve the economy's potential GDP, rather than balancing budgets either annually or over the business cycle
Term
Crowding out
Definition
The displacement of interest-sensitive private investment that occurs when higher gov. deficits drive up market interest ratess
Term
Crowding in
Definition
The potential for gov. spending to stimulate private investment in an otherwise dead economy
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