Discretionary fiscal policy refers to changes in taxes or spending that are the result of deliberate changes in government policy.

The government does not have complete control over tax revenues and certain expenditures.

Disposable income is the income used by households to consume, save, and pay taxes.

When the economy is in equilibrium, saving plus net taxes equal planned investment plus government purchases.

The multiplier effect of an increase in government spending is equivalent to the multiplier effect of a decrease in taxation.

Exports are a leakage and imports an injection into the circular flow.

The federal deficit was the lowest during the Reagan era, but grew substantially during the Clinton era.

Automatic stabilizers are automatic changes in government expenditures and taxation that tend to stabilize GDP throughout the business cycle.

Automatic taxation stabilizers create a so-called fiscal drag during economic expansions.

The full-employment budget may include a structural deficit.