Austerity
Definition
Austerity refers to economic policies implemented by governments to reduce budget deficits during adverse economic conditions. These policies may include spending cuts, tax increases, or a mixture of both.
Analogy
Imagine you've been spending too much money on video games and snacks. Your parents (representing the government) decide it's time for some austerity measures - they cut down on your allowance (spending cuts) and ask you to do more chores for extra cash (tax increase).
Related terms
Fiscal Policy: Government policy that attempts to manage the economy by controlling taxing and spending.
Deficit Spending: The amount by which spending exceeds revenue over a particular period of time, also known as simply deficit, or budget deficit;
Recession: A significant decline in activity across the economy lasting longer than a few months.
"Austerity" appears in:
Study guides (1)
Are you a college student?
Study guides for the entire semester
200k practice questions
Glossary of 50k key terms - memorize important vocab
Resources
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.