An activist policy is a government economic policy that uses elements of monetary and/or fiscal policy to respond dynamically to current economic conditions with the objective of stabilizing the economy.
Aggregate demand is the total quantity of goods and services demanded across all levels of an economy at a particular time and price level. It reflects the aggregate expenditure for 'everything that will be bought' in an economy.
Automatic stabilizers are built-in changes in government spending and taxation that dampen the business cycle by adjusting automatically with the economy's performance without additional legislative action.
The Benefit Principle is an economic theory proposing that those who benefit from government expenditures, which are financed by taxes, should also be the ones to pay the taxes that finance them.
Bracket creep occurs when taxpayers move into higher tax brackets due to inflationary increases in their nominal income without a real increase in their purchasing power. This phenomenon increases government revenue without any changes in tax rates.
A built-in stabilizer is a feature of a system that automatically tends to stabilize the system toward equilibrium or stability, particularly during economic fluctuations or disruptions.
The debt ceiling is the maximum amount of money that the federal government is allowed to borrow. When the federal government approaches the ceiling, Congress must raise it in order to authorize additional borrowing and the issuance of new debt by the Treasury.
A deficit occurs when expenditures surpass revenues, creating a shortfall that must be managed through measures such as borrowing or cost-cutting.
Deficit financing refers to the practice by a government agency of borrowing funds to cover a revenue shortfall. While this method can stimulate the economy in the short term, prolonged deficit financing may drive up interest rates and eventually slow economic growth.
Deficit spending refers to the situation where a government's expenditures exceed its revenues, causing a shortfall that must be financed through borrowing. This tactic is often employed for economic stimulus during periods of low economic activity.
A Double Taxation Agreement (DTA) is an agreement between two countries aimed at preventing the same income from being taxed twice. These agreements offer various forms of double taxation relief to companies or individuals who are subject to tax in both countries.
The European Economic and Monetary Union (EMU) signifies the convergence of EU member states' economies, overseeing the adoption of a single currency—the euro, and coordinating national economic policies.
Fiscal policy involves the strategic use of government spending and taxation to influence a nation's macroeconomic conditions. It plays a crucial role in managing economic cycles by affecting demand, employment, inflation, and overall economic growth.
A fiscalist is an economist who believes that government intervention in the economy, primarily through changes in taxation and government spending, is essential for managing economic stability and growth.
A government budget outlines the anticipated annual expenditures and revenue for goods and services, offering a financial framework for policy implementation and national economic health.
Federal legislation passed in 1985, aimed at reducing the United States federal budget deficit through automatic spending cuts if predefined deficit targets are not met. Officially titled the Balanced Budget and Emergency Deficit Control Act of 1985.
Gross federal debt refers to the total amount of debt that the federal government has accrued over time, encompassing both public and private holdings.
Income tax is a tax imposed by governments on individuals and businesses based on their earnings within a fiscal year. Understanding income tax is essential for compliance and financial planning.
Intervention in economics refers to government economic activity with the objective of influencing economic growth, controlling inflation, impacting the composition of the economy's output, and more.
Economic analysis developed by John Maynard Keynes based on the interaction of the money market and the goods market. It helps predict the effect of monetary and fiscal policies on interest rates and domestic production.
A liquidity trap is an economic situation where adding liquidity through increased money supply and lowered interest rates fails to stimulate borrowing, lending, consumption, and investment. It can sometimes be escaped through fiscal policy or distributing money directly to people.
Monetary policy comprises the procedures by which governments or central banks try to affect macroeconomic conditions by influencing the supply of money. This can be achieved through various mechanisms aside from printing more money, including open-market operations, adjusting reserve requirements, and changing interest rates.
National debt refers to the total amount of money that the federal government owes to creditors due to borrowing. It consists of various debt instruments such as Treasury bills, Treasury notes, and Treasury bonds. The interest on the national debt is a significant part of the federal government's annual expenses.
The Office for Budget Responsibility (OBR) is the independent economic forecasting watchdog established by HM Treasury in May 2010 to provide economic data and analysis for the UK government.
The Office of Management and Budget (OMB) at the federal level is an agency within the Office of the President responsible for preparing and presenting the President's budget to Congress, developing fiscal programs in cooperation with the Council of Economic Advisers and the Treasury Department, reviewing administrative policies and performance of government agencies, and advising the President on legislative matters.
The pre-budget report (PBR) is an economic forecast and policy statement presented by a government as a precursor to the main annual budget, providing an update on the nation's economic situation, planned economic policy direction, and public finance projections.
In the UK, a statement made by the Chancellor of the Exchequer in October-December that reports on the state of the economy and points forward to the Budget he will unveil in the spring.
Public debt, also known as government debt or sovereign debt, refers to the borrowings by governments to finance expenditures not covered by current tax revenues. It is accumulated by the government through the issuance of securities such as bonds and is an essential part of fiscal policy and economic management.
The Public Sector Borrowing Requirement (PSBR) refers to the amount of money the government needs to borrow to cover its expenditures if these exceed its income. It serves as an economic indicator tracking the difference between government expenditures and income from taxes and other revenue streams, typically over a fiscal year.
Public Sector Net Cash Requirement (PSNCR) refers to the amount of money that the government needs to borrow in a specified period to meet its expenditures and obligations, after accounting for its income.
The Public Sector Net Cash Requirement (PSNCR) represents the amount of borrowing needed by the UK government when its expenditure surpasses its income.
An economic policy of increasing government expenditures and/or reducing taxes in order to stimulate the economy to higher levels of output. Pump priming measures are temporary, aimed at fostering spontaneous and sustained economic growth.
Reaganomics is a term used to describe the conservative, free-market economic policies endorsed by President Ronald Reagan and his administration during his time in office from 1981 to 1989.
A regressive tax is a tax system where the tax rate decreases as the income of the taxpayer increases. This structure places more financial burden on lower-income earners relative to their income.
Changes in the tax laws designed to ensure that there is no net change in the total amount of revenue the government collects.
A soft landing refers to a situation in which an economy slows down but manages to avoid falling into a recession. This term was borrowed from astronautics in the late 1950s and originally described a safe moon landing.
Stabilization refers to various efforts and actions aimed at maintaining equilibrium in financial, economic, or market environments, ensuring stability in currency exchange rates, economic cycles, or securities prices.
A tax break refers to a reduction in tax liability that the government offers to stimulate or incentivize particular economic activities or behaviors.
Tax harmonization refers to the process of making tax systems more compatible across different jurisdictions, typically to minimize differences in tax bases and tax rates. This process aims to reduce tax competition and prevent tax evasion while fostering economic integration. However, it often faces resistance as it can limit the fiscal autonomy of individual governments.
Tax incidence refers to the analysis of the distribution of the tax burden between buyers and sellers. It assesses who ultimately bears the economic burden of a tax.
A tax rate is the percentage at which an individual or corporation is taxed. Tax liability is calculated by applying the appropriate tax rate to the tax base.
The Tax Wedge represents the economic effect of taxes which can potentially inhibit specific results by creating a wedge between the economic activities of producers and consumers.
A levy imposed on individuals and corporate bodies by central or local governments to finance government expenditures and implement fiscal policies, excluding payments for specific services rendered.
Tonnage tax is a method of calculating the corporation tax liability of a ship-owning company, allowing taxes to be based on the net registered tonnage of its shipping fleet instead of the actual profit or loss made.
In certain systems of budgetary control, virement is an agreed practice allowing for the transfer of funds from one part of the budget to another within the financial year. This can help manage projected surpluses and deficits across different budget heads.
Wage Stabilization refers to the act of maintaining wages at a certain level, preventing fluctuations, typically implemented as policy measures to curb inflationary pressure. These policies aim to control rapid changes in wage levels to maintain economic stability.
