Week 15 Gov Vocab

Balanced Budget

the situation in which the government’s tax and other revenues for the year are roughly equal to its expenditures

budget deficit

the situation in which the government’s expenditures exceed its tax and other revenues.

Demand-side economics

a form of fiscal policy that emphasizes “demand” (consumer spending). Government can use increased spending or tax cuts to place more money in consumers’ hands and there by increase demand.

Deregulation

the rescinding of excessive government regulations for the purpose of improving economic efficiency.

economic depression

a very severe and sustained economic downturn. Depressions are rare int he United States: the last one was in the 1930s.

economic efficiency

an economic principle holding that firms should fulfill as many of society’s needs as possible while using as few of its resources as possible. The greater the output (production) for a given input (e.g., an hour of labor), the more efficient the process.

Economic equity

the situation in which the outcome of an economic transaction is fair to each party. An outcome can usually be considered fair if each party enters into a transaction freely and is not unknowingly at a disadvantage.

Economic recession

a moderate but sustained downturn in the economy. Recessions are part of the economy’s normal cycle of ups and downs.

economy

a system for the exchange of goods and services between the producers of those goods and services and the consumers of them.

externalities

burdens that society incurs when firms fail to pay the full costs of production. An example of an externality is the pollution that results when corporations dump industrial wastes into lakes and rivers.

fiscal policy

a tool of economic management by which government can attempt to maintain a stable economy through its taxing and spending policies.

inflation

a general increase in the average level of prices of goods and services.

laissez-faire economics

a classic economic philosophy holding that owners of business should be allowed to make their own production and distribution decisions without government regulation or control.

monetary policy

a tool of economic management based on manipulation of the amount of money in circulation.

regulation

a term that refers to government restrictions on the economic practices of private firms.

supply-side economics

a form of fiscal policy that emphasizes “supply” (production). An example of supply-side economics would be a tax cut for business.

national debt

the total cumulative amount that the U.S. government owes to creditors