Fiscal Policy and Taxation Overview

Flashcards covering key vocabulary, concepts, and definitions related to fiscal policy and taxation as discussed in the lecture.

Balanced Budget

A budget in which revenues are equal to expenditures, preventing deficit spending.

Progressive Income Tax System

A tax system where tax rates increase as income increases, meaning higher earners pay a larger percentage of their income in taxes.

Marginal Tax Rate

The rate of tax applied to the last dollar earned, which differs based on income brackets.

Automatic Stabilizers

Economic policies and programs that automatically adjust fiscal policy in response to economic fluctuations without the need for direct legislative action.

Keynesian Multiplier

An economic theory stating that a change in government spending or taxation affects overall economic activity by a greater multiplicative effect in GDP.

Unemployment Insurance (UI)

A government program that provides temporary financial assistance to unemployed workers who meet certain eligibility requirements.

SNAP (Supplemental Nutrition Assistance Program)

A program that provides food-purchasing assistance for low-income individuals and families in the United States.

Crowding Out

A situation in which increased government spending leads to decreased private sector investment due to higher interest rates.

Discretionary Fiscal Policy

Deliberate changes in government spending and taxation policies that require legislative approval.

Pork Barrel Spending

Government spending for localized projects secured solely or primarily to bring money to a representative's district.

Disposable Income

The amount of money available to households after taxes and necessary expenses have been paid, influencing consumption patterns.

Income Support Programs

Government programs that provide financial assistance to individuals in need, such as unemployment insurance and Medicaid.

Investment Demand

The total amount of investment spending that firms plan to undertake at a given interest rate.

Multiplier Effects of Government Spending

The economic concept that emphasizes the amplification of total spending resulting from an initial expenditure by the government.

Transfer Payments

Payments made by the government to individuals without the requirement of goods or services in return, such as welfare benefits.

Health Insurance for the Poor

Medicaid, a program providing health coverage to eligible low-income individuals.

Consumption

The total amount of goods and services consumed by households, a key component of GDP.