Economic Policy and National Debt

These flashcards cover key concepts from the lecture notes regarding economic policy, national debt, deficit spending, and the various ways these economic issues are perceived and managed.

What is the definition of national debt?

The total deficit from the first presidency down to the present.

What causes a deficit?

When the government in one year spends more money than it takes in from taxes.

What is gross domestic product (GDP)?

The total value of all the goods and services the nation produces each year.

What did Standard & Poor's do in April 2011 regarding America's national debt?

It issued a warning and downgraded it from 'stable' to 'negative'.

What are the two main opposing strategies politicians offer to combat national debt?

Cutting spending (mainly by conservatives) and raising taxes (mainly by liberals).

What is Keynesianism?

The belief that government must manage the economy by spending more money when in a recession and cutting spending when there is inflation.

What is the main belief of supply-side economics?

That lower taxes and fewer regulations will stimulate the economy.

What did the Federal Reserve do during the recession that began in 2007?

Cut interest rates to make it easier for people and businesses to borrow money.

What major economic issue arose from the aging population in the U.S.?

It created huge new demands for Social Security and medical payments under Medicare.

What triggered the recession that started in 2007?

The housing market collapse due to increased defaults on subprime mortgages.