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Government Finance
| Question | Answer |
|---|---|
| Direct Effects | effect of individuals behavior not changing |
| Indirect Effects | effect of individuals behavior changing |
| Direct Vs. Indirect | direct expects behaviors to stay the same, Indirect is when behaviors change |
| Debt | the accumulated money the owed after years of deficit |
| Deficit | the accumulated lack of money to support spending at the ends of a year |
| Debt Vs. Deficit | debt is over time while Deficit is within one year |
| Surplus | having more than what is necessary |
| Entitlement / Mandatory Spending | spending that the Government has to do, for example, social security |
| Discretionary Spending | spending that is left over after the government has done mandatory spending |
| Balanced Budget | when expenses do not exceed revenues |
| Positive Externality | actions that by one party causes benefit for the other party without the first party receiving benefits |
| Negative Externality | actions that by one party causes harm for the other party without the first party receiving harm |
| Positive Vs. Negative Externality | negative causes harm, positive causes benefits |
| Pigouvian Tax Vs. Pigouvian Subsidy | the Pigouvian subsidy cause under production to rise and Pigouvian tax cause over production to lower, both bringing it to equilibrium |
| Budget Constraint | combination of all goods an individual can buy if they spend their entire income |
| Utility Function | a mathematical function representing individuals preference |
| Indifference Curve | shows a set of bundles of goods about which an individual is indifferent |
| Randomized Control Trial | an experiment designed to find casuality |
| Quasi-Experiment | changes in economic environment that create newly identical treatment and control groups for studying the effect of that policy change |
| Time Series Data | the correlation of two series over time |
| Coase Theory | there needs to be well defines property rights and costless bargaining, also does not depend who is assigned the property rights |
| Crowd Out | decrease in private sector investment because of in crease in government borrowing and spending, this raises interest rates |
| Market Failure | when the market is not performing at its potential efficient level |
| Budget Surplus | when there is extra money after spending |
| Income Effect | rise in the price of a good will cause and individual to buy less of all goods because income can purchase less than before |
| Substitution | when an item has a very similar counter item that can replace it |
| When? | when should government intervene? |
| How? | how might the government intervene? |
| What? | what is the effect of intervention? |
| Why? | why do governments choose to intervene? |
| Marginal Utility | additional increment to utility obtained by consuming an additional good |
| Marginal Productivity | the impact of a unit change in any input, holding other inputs constant, on the firms output |
| Marginal Cost | the cost to a firm of producing or consuming one more |
| Social Efficiency | level of well being in society |
| Equity Efficiency | choice society must make between the total size of economic pie and the distribution among individuals |
| Equality of Opportunity | everyone have and equal opportunity to consume, produce, or do something |
| Empirical Public Finance | use of data statistics to measure the impact of government policy |
| Difference in Difference | estimates the difference between the changes in outcomes for the treatment group that experiences an intervention and the control group does not |
| Real Prices | prices in base year money |
| Nominal Prices | prices in today's money |
| Cyclically Adjusted Budget Deficit | nominal is in today's money, real is in the base years price |
| Cash Accounting | measuring the governments fiscal position with revenue minus |
| Capital Accounting | measuring the governments fiscal position that counts assets |
| Cash Vs. Capital Accounting | capital is taking into account assets, cash is only taking into account money |
| Static Scoring | method used to assure that government policy changes only the distribution of total resources, not the amount of total resources |
| Dynamic Scoring | method used to model the effect of government policy on the distribution of total resources and the amount of total resources |
| Static Vs. Dynamic Scoring | static scoring makes sure their is no change in the amount of total resources, dynamic scoring shows the effect on amount of total resources |
| Implicit Obligation | financial obligations that government has in the future that is not recognized in annual budgetary process |
| Present Discounted Value | the value of each periods dollar amount in todays terms |
| Intertemporal Budget Constraint | the present discounted value of the governments obligations to the present discounted value of it's revenue |
| Automatic Stabilization | automatic reduction in revenue and increases in outlays when economy shrinks |
| Discretionary Stabilization | when the government intervenes to stabilize the economy, example, covid-19 laws |
| PMC | direct cost to producers to produce and additional unit |
| PMB | direct benefit to consumers of consuming and additional unit |
| Private Sector Solutions | Coase Theorem |
| Public Sector Solutions | corrective taxation and corrective subsidies |
Created by:
Sunny_Yeah