| Annually balanced budget | the principle that government revenues and expenditures should balance each year
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| Automatic stabilizers | built-in measures, such as taxation and transfer payment programs, that lessen the effects of the business cycle
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| Balanced budget | the situation where a government's expenditures and revenues are equal
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| Budget deficit | the situation where a government's expenditures exceed its revenues
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| Budget surplus | the situation where a government's revenues exceed its expenditures
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| Contractionary fiscal policy | government policy that involves decreasing government purchases, increasing taxes, or both to restrain spending and output
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| Contractionary policies | government policies designed to stabilize prices and reduce output
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| Cyclically balanced budget | the principle that government revenues and expenditures should balance over the course of one business cycle
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| Decision lag | the amount of time needed to formulate and implement an appropriate policy
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| Discretionary policy | intentional government intervention in the economy, such as budgeted changes in spending or taxation
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| Expansionary fiscal policy | government policy that involves increasing government purchases, decreasing taxes, or both to stimulate spending and output
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| Expansionary policies | government policies designed to reduce unemployment and stimulate output
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| Fiscal policy | government stabilization policy that uses taxes and government purchases as its tools; budgetary policy
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| Fiscal year | the 12-month period to which a budget applies
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| Functional finance | the principle that government budgets should be geared to the yearly needs of the economy
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| Impact lag | the amount of time between a policy's implementation and its having an effect on the economy
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| Marginal propensity to consume | the effect on domestic consumption of a change in income
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| Marginal propensity to withdraw | the effect on withdrawals—saving, imports, and taxes—of a change in income
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| Monetary policy | government stabilization policy that uses interest rates and the money supply as its tools
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| Multiplier effect | the magnified impact of a spending change on aggregate demand
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| Net tax revenues | taxes collected, minus transfers and subsidies
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| Public debt | the total amount owed by the federal government as a result of its past borrowing
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| Public debt charges | the amounts paid out each year by the federal government to cover the interest charges on its public debt
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| Recognition lag | the amount of time it takes policy-makers to realize that a policy is needed
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| Spending multiplier | the value by which an initial spending change is multiplied to give the total change in real output
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| Stabilization policy | government policy designed to lessen the effects of the business cycle
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2002 McGraw-Hill Higher Education