Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

KEY TERMS

Question

Social insurance
Expansionary fiscal policy
Contractionary fiscal policy
Lump-sum taxes
Automatic stabilizers
Discretionary fiscal policy
Cyclically adjusted budget balance
Fiscal year
Public debt
Debt–GDP ratio
Implicit liabilities
government programs—like Social Security, Medicare, unemployment insurance, and food stamps—intended to protect families against economic hardship.
fiscal policy that increases aggregate demand by increasing government purchases, decreasing taxes, or increasing transfers.
spending promises made by governments that are effectively a debt despite the fact that they are not included in the usual debt statistics. In the United States, the largest implicit liabilities arise from Social Security and Medicare, which promise transfer payments to current and future retirees (Social Security) and to the elderly (Medicare).
a tax that is the same for everyone, regardless of any actions people take.
government debt held by individuals and institutions outside the government.
an estimate of what the budget balance would be if real GDP were exactly equal to potential output.
government debt as a percentage of GDP, frequently used as a measure of a government’s ability to pay its debts.
the time period used for much of government accounting, running from October 1 to September 30 in the United States. Fiscal years are labeled by the calendar year in which they end.
government spending and taxation rules that cause fiscal policy to be automatically expansionary when the economy contracts and automatically contractionary when the economy expands without requiring any deliberate actions by policy makers. Taxes that depend on disposable income are the most important example of automatic stabilizers.
fiscal policy that reduces aggregate demand by decreasing government purchases, increasing taxes, or decreasing transfers.
fiscal policy that is the direct result of deliberate actions by policy makers rather than automatic adjustments or rules.