balanced budget-revenues are equal to government expenditures

budget deficit-results from excessive spending in which federal government spends more in a year than it receives in tax and other revenues

budget surplus-federal government receives more in tax and other revenues than it spends

capital gains tax-tax that individuals pay on money gained from sale of capital asset, like property or stocks


Deficit spending-

demand-side economics-Keynes's theory baed on this. form of fiscal policy that emphasizes consumer spending. Government can use increased spending or tax cuts to place more money in consumers' hands and thereby increase demand

Deregulation-the rescinding of regulations already in force for the purpose of improving efficiency.

economic depression-an exceptionally steep and sustained decline in economy.

Economic recession-moderate but sustained downturn in economy. part of normal cycle of ups and downs


Economy-moderate but sustained downturn in economy. part of normal cycle of ups and downs


Efficiency

Equity-

Externalities-burdens society incurs when firms fail to pay full costs of production.

Fiscal policy-A tool of economic management by which government attempts to maintain stable economy based on government decisions in regard to spending and taxing. Aim to stimulate a weak economy or dampen overheated economy.
Graduated personal income tax-tax rate increases significantly as income rises, thus shifting more of the tax burden to wealthier individuals

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


Laissez-faire doctrine-A doctrine advanced by Adam Smith which holds that private firms should be free to make their own production and distribution decisions.


Monetary policy-tool of economic management based on manipulation of amount of money in circulation


National debt-increased by budget deficit. Total cumulative amount the federal government owes to its creditors. Government pays interest on the debt, consuming taxpayers' money.


Policy formation-

Policy implementation-

Problem recognition-

Public policy process-

Regulation-Government restrictions on private firms designed to promote economic efficiency and equity


Supply-side economics- form of fiscal policy that emphasizes production. example: tax cuts for business