| Balanced budget | Revenues from taxes for the year were equal to government expenditures for that same year.
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| Budget deficit | Government expenditures for a given fiscal year exceed revenues from taxes.
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| Budget surplus | Occurs when the federal government receives more in tax and other revenues than it spends.
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| Capital-gains tax | Tax that individuals pay on gains in capital investments such as property and stock.
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| Deficit-spending | Spending for a given fiscal year exceeded revenues for that same year.
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| Demand-side economics | A form of fiscal policy that emphasizes "demand" (consumer spending). Government can use increased spending or tax cuts to place more money in consumers' hands and thereby increase demand.
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| Deregulation | Rescinding regulations to improve efficiency.
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| Economic depression | An exceptionally steep and sustained downturn in the economy.
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| Economic recession | Less severe downturn in the economy.
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| Economy | A system of production and consumption of goods and services which are allocated through exchange among producers and consumers.
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| Efficiency | The relationship of inputs (the labor and material that go into making a product or service) to outputs (the product or service itself). The greater the output for a given input, the more efficient the production process.
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| Equity (in relation to economic policy) | A situation in which the outcome of an economic transaction is fair to each party. An outcome can usually be considered fair if each party enters into a transaction freely and neither is at a disadvantage.
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| Externalities | Burdens that society incurs when firms fail to pay the full cost of resources used in production. An example of an externality is the pollution that results when corporations dump industrial wastes into lakes and rivers.
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| Fiscal policy | A tool of economic management by which government attempts to maintain a stable economy through its taxing and spending decisions.
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| Graduated personal income tax | Tax rate goes up substantially as income rises.
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| Inflation | An increase in the average level of prices of goods and services.
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| Laissez-faire doctrine | A classic economic philosophy which holds that owners of businesses should be allowed to make their own production and distribution decisions without government regulation or control.
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| Monetary policy | A tool of economic management available to government that involves manipulation of the amount of money in circulation.
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| National debt | The total amount owed to creditors by the federal government.
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| Regulation | A term that refers to government restrictions on the economic practices of private firms.
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| Supply-side economics | A form of fiscal policy that emphasizes "supply" (production). An example of supply-side economics would be a tax cut on business.
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