Econ ch.15

Transfer payments

Payments made to groups or individuals when no good or service is received in return.

Government outlays

Government budgets combine spending and transfer payments into a broad category called...

Mandatory outlays

Largest portion of the federal budget; ongoing government programs like social security and medicare.

Discretionary outlays

Are subject to adjustment during the annual budget process. Examples include monies for bridges and roads, payments to government workers, and defense spending.

Social security

Government-administered retirement funding program.

Medicare

Mandated federal program that funds health care for people aged 65 and older. This program was established in 1965 with the goal of providing medical insurance for all retired workers.

Progressive income tax system

People with higher incomes pay a larger percentage of their income in taxes than people with lower incomes do.

Marginal tax rate

The tax rate paid on an individual's "next dollar" of income.

Average tax rate

The total tax paid divided by taxable income.

Budget deficit

Occurs when government outlays exceed revenue in a given time period, usually a year.

Budget surplus

Occurs when revenue exceeds outlays.

Debt

The total of all accumulated and unpaid budget deficits.