ECON 202 Chapter 15

Budget

A plan for government income and spending.

Government Outlays

Total government spending and transfer payments.

Mandatory Outlays

Required government spending by existing laws.

Discretionary Spending

Adjustable government spending during budget process.

Transfer Payments

Payments without goods/services received in return.

Social Security

Retirement funding program requiring worker contributions.

Medicare

Health care funding for individuals 65 and older.

Income Assistance

Welfare payments to support low-income individuals.

Tax Revenue

Income collected by government from various taxes.

Progressive Income Tax

Higher earners pay larger percentage of income.

Marginal Tax Rate

Tax rate on the next dollar earned.

Average Tax Rate

Total tax paid divided by taxable income.

Federal Budget

Annual financial plan for government operations.

Budget Deficit

Outlays exceed revenue in a fiscal year.

Budget Surplus

Revenue exceeds outlays in a fiscal year.

Publicly Held Debt

Debt not owned by the government itself.

Fiscal Policy

Government use of spending and taxes to influence economy.

Monetary Policy

Adjusting money supply to influence economic activity.

Interest Payments

Payments on borrowed funds by the government.

Corporate Income Tax

Tax on profits earned by corporations.

Social Insurance Tax

15% tax split between employee and employer.

Loanable Funds

Funds available for borrowing in the economy.

Economic Viewpoints

Different theories on government role in economy.

Classical Economists

Believe economy self-adjusts without government intervention.

Keynesian Economists

Advocate for government intervention to stabilize economy.