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Budget Surplus and Budget Deficit definitions

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Terms in this set (13)

  • Tax Revenue
    Funds collected by the government from individuals and businesses, serving as the main inflow for public budgets.
  • Government Purchases
    Spending by the government on goods and services such as infrastructure, directly contributing to economic activity.
  • Transfers
    Payments made by the government, like welfare or unemployment benefits, without receiving goods or services in return.
  • Budget Surplus
    Situation where government inflows from taxes exceed outflows for purchases and transfers, resulting in savings.
  • Budget Deficit
    Condition where government spending and transfers surpass tax inflows, leading to negative savings.
  • Government Savings
    The net result of tax inflows minus spending and transfers, indicating fiscal health as surplus or deficit.
  • Business Cycle
    Recurring phases of economic expansion and contraction that influence government fiscal outcomes.
  • Recession
    Period marked by declining economic activity, often prompting increased government spending and larger deficits.
  • Expansion
    Phase of rising economic output, typically reducing the need for increased government spending.
  • Potential GDP
    Level of economic output achievable when resources are fully employed, used as a benchmark for fiscal adjustments.
  • Cyclically Adjusted Budget Deficit
    Fiscal measure recalculated to remove effects of economic fluctuations, revealing the underlying budget position.
  • Automatic Stabilizer
    Mechanism causing taxes and spending to change with the economy, moderating fluctuations without new policies.
  • Fiscal Policy
    Government strategy involving changes in spending and taxation to influence economic conditions.