gov ch 18

supply-side theory

An economic philosophy that holds that sharply cutting taxes would increase the incentive to invest, leading to more tax revenues

globalization

The growing integration of the economies and societies of the world

fiscal year (FY)

The period from October 1 to September 30 for which government appropriations are made and federal books are kept

fiscal policy

The use of taxes and expenditures to affect the economy

federal reserve system

The mechanism that regulates the supply and price of money

entitlements

Mandatory government spending (e.g., Social Security, Medicare, Food Stamps)

economic planning

The theory that government should control wages and prices

discretionary spending

Spending not required to pay for contracts, interest on the national debt or entitlement programs

deficit

What occurs when the government in one year spends more money than it takes in from taxes

council of economic advisors

A group that forecasts economic trends

congressional budget act

Legislation that authorizes budget ceilings

budget surplus

A situation in which the government takes in more money than it spends

budget resolution

A recommendation for budget ceilings to guide legislative committees in their spending decisions

budget

A document that announces how much the government will collect in taxes and spend in revenues and how those expenditures will be allocated

sociotropic voting

Electoral behavior that regards the condition of the national economy more so than one’s own personal finances

sequester

Automatic, across-the-board cuts in certain federal programs when Congress and the president cannot agree on a spending plan

self-regarding voter theory

The theory that voters are mostly influenced by their own immediate economic situation

treasury department

An organization that provides estimates of tax revenues

price and wage control

Government regulation of the maximum prices that can be charged and wages that can be paid

planning

An economic philosophy that assumes that the government should plan some part of the country’s economic activity

other-regarding voter theory

The theory that voters worry about community and national interests

national debt

The total deficit from the first presidency down to the present

monetary policy

The use of the amount of money in bank deposits and the price of money to affect the economy

monetarism

The theory that inflation occurs when there is too much money chasing too few goods

loopholes

General term for deductions, exemptions and exclusions in the tax code

keynesianism

The theory that the health of an economy depends on what fraction of their incomes people save or spend

gross domestic product

The total of all goods and services produced in the economy during a given year