Econ Test 3 - recession and increases governments budget...

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1. Council of Economic Advisers - a group of 3 persons that advises and assists the president of the US on economic matters (including the preparation of the annual Economic Report of the President) 2. Expansionary fiscal policy - an increase in government purchases of goods and services, a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate demand and expanding real output 3. budget deficit - the amount by which the expenditures of the Federal government exceed its revenues in any year 4. contractionary fiscal policy - a decrease in government purchases for goods and services, an increase in net taxes, or some combination of the 2, for the purpose of decreasing aggregate demand and thus controlling inflation 5. budget surplus - the amount by which the revenues of the Federal government exceed its revenues in any year 6. built-in stabilizer - a mechanism that increases government’s budget deficit (or reduces its surplus) during a
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Unformatted text preview: recession and increases governments budget surplus (or reduces it deficit) during an expansion without any action by policymakers. The tax system is one such mechanism 7. progressive tax system- a tax whose average tax rate increases as the taxpayers income increases and decreases as the income decreases 8. proportional tax system- a tax whose average tax rate remains constant as the taxpayers income increases or decreases 9. regressive tax system- a tax whose average tax rate decreases as the taxpayers income increases and increases as the taxpayers income decreases 10. standardized budget- a comparison of the government expenditures and tax collections that would occur if the economy operated at fully employment throughout the year; the full-employment budget 11. cyclical deficit- a Federal budget deficit that is caused by a recession and the consequent decline in tax revenues 12. recognition lag- 13. administrative lag-...
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