Federal Debt and Deficit in American Government

These flashcards cover key concepts related to federal debt and deficit in the context of American government, including definitions of terms and implications on economy.

National Debt

The total amount of money that a government owes due to accumulated deficits.

Deficit

A financial situation where government outlays exceed revenues, resulting in a shortfall.

Surplus

A financial state where government revenues exceed outlays.

Government Revenues

The income that the government collects, primarily from taxes and fees.

Government Outlays

Government spending

Current National Debt

The total national debt of the United States, which is approximately $37 trillion.

Strategic Investment

Investment initiatives by the government that promote economic growth and stability.

Good Debt

Debt that is used to finance assets that increase in value and generate income over the long term.

Bad Debt

Debt acquired to purchase items that lose value quickly and often finances 'wants' rather than 'needs.'

Fiscal Policy

The use of government spending and taxation to influence the economy.

Monetary Policy

The management of the money supply and interest rates by the central bank to influence the economy.

Crowding Out Effect

A situation where increased government borrowing leads to a reduction in private sector investment.

IMF Suggested Deficit to Debt Ratio

The recommended deficit to debt ratio by the International Monetary Fund for developed countries, which is 3%.

Primary Interest Rate

The interest rate that commercial banks charge their most creditworthy corporate customers. It serves as a benchmark for other lending rates.

Money in Circulation

The total amount of currency, including physical cash and coins, and often demand deposits, that is available in an economy.