Glossary
Budget Deficit
A situation where government expenditures exceed its revenue in a given fiscal year, requiring the government to borrow funds.
Example:
When the government spends more on healthcare and defense than it collects in taxes, it runs a Budget Deficit for that year.
Budget Surplus
A situation where government revenue exceeds its expenditures in a given fiscal year, allowing for debt reduction or increased savings.
Example:
If a country collects 4.8 trillion, it achieves a Budget Surplus of $200 billion.
Federal Budget
A 12-month projection of government spending and revenue, typically starting on October 1st.
Example:
Each year, Congress debates and approves the Federal Budget to allocate funds for various government operations and programs.
Fiscal Restraint
Contractionary fiscal policy actions, such as decreased government spending or increased taxes, designed to slow down an overheated economy.
Example:
If inflation is rising too quickly, the government might apply Fiscal Restraint by cutting back on infrastructure projects to reduce aggregate demand.
Fiscal Stimulus
Expansionary fiscal policy actions, such as increased government spending or decreased taxes, aimed at boosting economic activity.
Example:
During a recession, the government might implement a Fiscal Stimulus package, like sending out direct payments to households, to encourage consumer spending.
Government Expenditures
The total spending by the government on goods, services, and transfer payments to individuals and organizations.
Example:
Funding for national defense, education programs, and Social Security benefits are all examples of Government Expenditures.
Government Revenue
The income collected by the government, primarily through various forms of taxation like income, excise, and regulatory taxes.
Example:
A significant portion of Government Revenue in the U.S. comes from individual income taxes and corporate profits taxes.
National Debt
The total accumulation of all past budget deficits minus any surpluses, representing the total amount of money the government owes to its creditors.
Example:
Years of continuous Budget Deficits have contributed to the U.S. National Debt growing to over $31 trillion, requiring significant interest payments.