Macroeconomics 5.1, 5.2, 5.3, 5.4, 5.5

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13 Terms

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National Debt

Total accumulated amount of money that the federal government has borrowed to cover the outstanding balance of expenses incurred over time

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Fiscal Year

Runs from october 1 to september 30 and are labeled by the calendar year in which they end.

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Debt-GDP ratio

The government’s debt expresses as a percentage of its GDP

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Implicit Liabilities

Spending promises made by governments that are effectively a debt despite the fact that they are not included in the usual debt statistics

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Budget balance

The difference between the government’s tax revenue and its spending, both on goods and services and on government transfers, in a given year

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Debt

Accumulation of budget deficits

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Cyclically adjusted budget balance

Estimate of what the the budget balance would be if real GDP were exactly equal to potential output

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Target Federal funds rate

A desired level for the federal funds rate

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Expansionary monetary policy

Monetary policy that shifts the AD curve to the right

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Contractionary monetary policy

Monetary policy that shifts the AD curve to the left

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Taylor rule

A rule setting the federal funds rate that takes into account both the inflation rate and the output gap.

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Inflation targeting

Announcing the inflation rate that needs to be achieved by the Fed and set ting olucy in an attempt to hit that target.

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Monetary neutrality