This glossary defines economic and budgetary terms as they apply to The Budget and Economic Outlook; it also acts as a general reference for readers. In some cases, the entries sacrifice technical precision for the sake of brevity and clarity. Where appropriate, entries note the sources of data for economic variables as follows:
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(BEA) refers to the Bureau of Economic Analysis in the Department of Commerce,
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(BLS) refers to the Bureau of Labor Statistics in the Department of Labor,
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(NBER) refers to the National Bureau of Economic Research (a private entity).
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Accrual accounting: A system of accounting in which revenues are recorded when they are earned and outlays are recorded when goods are received or services are performed, even though the actual receipt of revenues and payment for goods or services may occur, in whole or in part, at a different time. Compare with cash accounting.
adjusted gross income (AGI): All income that is subject to taxation under the individual income tax after "above-the-line" deductions for such things as alimony payments and certain contributions to individual retirement accounts. Personal exemptions and the standard or itemized deductions are subtracted from AGI to determine taxable income.
advance appropriation: Budget authority provided in an appropriation act that is first available for obligation in a fiscal year after the year for which the appropriation was enacted. The amount of the advance appropriation is included in the budget totals for the year in which it will become available. See appropriation act, budget authority, fiscal year, and obligation; compare with forward funding, obligation delay, and unobligated balances.
aggregate demand: Total purchases of a country’s output of goods and services by consumers, businesses, governments, and foreigners during a given period. (BEA) Compare with domestic demand.
AGI: See adjusted gross income.
alternative minimum tax (AMT): A tax intended to limit the extent to which higher-income people can reduce their tax liability (the amount they owe) through the use of preferences in the tax code. Taxpayers subject to the AMT are required to recalculate their tax liability on the basis of a more limited set of exemptions, deductions, and tax credits than would normally apply. The amount by which a taxpayer’s AMT calculation exceeds his or her regular tax calculation is that person’s AMT liability.
appropriation act: A law or legislation under the jurisdiction of the House and Senate Committees on Appropriations that provides authority for federal programs or agencies to incur obligations and make payments from the Treasury. Each year, the Congress considers regular appropriation acts, which fund the operations of the federal government for the upcoming fiscal year. The Congress may also consider supplemental, deficiency, or continuing appropriation acts (joint resolutions that provide budget authority for a fiscal year until the regular appropriation for that year is enacted). See budget authority, fiscal year, and obligation.
authorization act: A law or legislation under the jurisdiction of a committee other than the House and Senate Committees on Appropriations that establishes or continues the operation of a federal program or agency, either indefinitely or for a specified period. An authorization act may suggest a level of budget authority needed to fund the program or agency, which is then provided in a future appropriation act. However, for some programs, the authorization itself may provide the budget authority. See appropriation act and budget authority.
Balanced Budget and Emergency Deficit Control Act of 1985 (Public Law 99-177): Referred to in CBO’s reports as the Deficit Control Act, it also has been known as Gramm-Rudman-Hollings. Among other changes to the budget process, the law established rules that governed the calculation of CBO’s baseline. In addition, it set specific deficit targets as well as sequestration procedures to reduce spending if those targets were exceeded. The targets were changed to discretionary spending limits and pay-as-you-go (PAYGO) controls by the Budget Enforcement Act of 1990. However, the discretionary spending limits and the sequestration procedure to enforce them expired on September 30, 2002. PAYGO and its sequestration procedure were rendered ineffective on December 2, 2002, when P.L. 107-312 reduced all PAYGO balances to zero. The remaining provisions, including the rules that govern the calculation of the baseline, expired on September 30, 2006. CBO, however, continues to follow the methodology prescribed in the law for establishing baselines. See baseline, discretionary spending limits, pay-as-you-go, and sequestration.
baseline: A benchmark for measuring the budgetary effects of proposed changes in federal revenues or spending. As defined in the Deficit Control Act, the baseline is the projection of current-year levels of new budget authority, outlays, revenues, and the deficit or surplus into the budget year and out-years on the basis of current laws and policies, calculated following the rules set forth in section 257 of that law. Section 257 expired in September 2006, but CBO continues to prepare baselines following the methodology prescribed in the section. Estimates consistent with section 257 are used by the House and Senate Committees on the Budget in implementing the pay-as-you-go rules in each House. See Balanced Budget and Emergency Deficit Control Act of 1985, budget authority, deficit, fiscal year, outlays, pay-as-you-go, revenues, and surplus.
basis point: One one-hundredth of a percentage point. (For example, the difference between interest rates of 5.5 percent and 5.0 percent is 50 basis points.)
Blue Chip consensus forecast: The average of approximately 50 private-sector economic forecasts compiled and published monthly by Aspen Publishers, Inc.
book depreciation: See depreciation.
book profits: Profits calculated using book (or tax) depreciation and standard accounting conventions for inventories. Different from economic profits, book profits are referred to as "profits before tax" in the national income and product accounts. See depreciation, economic profits, and national income and product accounts.
budget authority: Authority provided by law to incur financial obligations that will result in immediate or future outlays of federal government funds. Budget authority may be provided in an appropriation act or authorization act and may take the form of borrowing authority, contract authority, entitlement authority, or authority to obligate and expend offsetting collections or receipts. Offsetting collections and receipts are classified as negative budget authority. See appropriation act, authorization act, contract authority, offsetting collections, offsetting receipts, and outlays.
Budget Enforcement Act of 1990: Among other changes to the budget process, this law established discretionary spending limits and pay-as-you-go controls by amending the Balanced Budget and Emergency Deficit Control Act of 1985. See Balanced Budget and Emergency Deficit Control Act of 1985, discretionary spending limits, and pay-as-you-go.
budget function: One of 20 general-subject categories into which budgetary resources are grouped so that all budget authority and outlays can be presented according to the national interests being addressed. There are 17 broad budget functions, including national defense, international affairs, energy, agriculture, health, income security, and general government. Three other functions—net interest, allowances, and undistributed offsetting receipts—are included to complete the budget. See budget authority, net interest, offsetting receipts, and outlays.
budget resolution: A concurrent resolution, adopted by both Houses of Congress, that sets forth a Congressional budget plan for the budget year and at least four out-years. The plan consists of targets for spending and revenues; subsequent appropriation acts and authorization acts that affect revenues or direct spending are expected to comply with those targets. The targets are enforced in each House of Congress through procedural mechanisms set forth in law and in the rules of each House. See appropriation act, authorization act, direct spending, fiscal year, and revenues.
budget year: See fiscal year.
budgetary resources: All sources of authority provided to federal agencies that permit them to incur financial obligations, including new budget authority, unobligated balances, direct spending authority, and obligation limitations. See budget authority, direct spending, obligation limitation, and unobligated balances.
business cycle: Fluctuations in overall business activity accompanied by swings in the unemployment rate, interest rates, and corporate profits. Over a business cycle, real (inflation-adjusted) activity rises to a peak (its highest level during the cycle) and then falls until it reaches a trough (its lowest level following the peak), whereupon it starts to rise again, defining a new cycle. Business cycles are irregular, varying in frequency, magnitude, and duration. (NBER) See real and unemployment rate.
business fixed investment: Spending by businesses on structures, equipment, and software. Such investment is labeled "fixed" to distinguish it from investment in inventories. See inventories.
Capacity utilization rate: The seasonally adjusted output of the nation’s factories, mines, and electric and gas utilities expressed as a percentage of their capacity to produce output. A facility’s capacity is the greatest output it can maintain with a normal work pattern. (FRB)
capital: Tangible and intangible resources that can be used or invested to produce a stream of benefits over time. Physical capital—also known as fixed capital or the capital stock—consists of land and the stock of products set aside to support future production and consumption, including business inventories and capital goods (residential and nonresidential structures and producers’ durable equipment). Human capital is the education, training, work experience, and other attributes that enhance the ability of the labor force to produce goods and services. The capital of a business is the sum advanced and put at risk by the business’s owners: For example, bank capital is the sum put at risk by the owners of a bank. In an accounting sense, capital is a firm’s net worth or equity—the difference between its assets and liabilities. Financial capital is wealth held in the form of financial instruments (stocks, bonds, mortgages, and so forth) rather than held directly in the form of physical capital.
capital gains and losses: The increase or decrease in the value of an asset that comes from the increase or decrease in the asset’s market price since it was purchased. A capital gain or loss is "realized" when the asset is sold.
capital income: Income derived from wealth, such as stock dividends, realized capital gains, or the owner’s profits from a business. See capital gains and losses.
capital services: A measure of how much the stock of physical capital contributes to the flow of production.
cash accounting: A system of accounting in which revenues are recorded when they are actually received and outlays are recorded when payment is made. Compare with accrual accounting.
central bank: A government-established agency responsible for conducting monetary policy and overseeing credit conditions. The Federal Reserve System fulfills those functions in the United States. See Federal Reserve System and monetary policy.
COLA: See cost-of-living adjustment.
compensation: All of the income due to an employee for his or her work during a given period. In addition to wages, salaries, bonuses, and stock options, compensation includes fringe benefits and the employer’s share of payroll taxes for social insurance programs, such as Social Security. (BEA)
Consolidated Appropriations Act of 2008 (Public Law 110-161): This law and the Department of Defense Appropriations Act of 2008 (Public Law 110-116) provided appropriations for most federal agencies for fiscal year 2008.
constant dollar: A measure of spending or revenues in a given year that has been adjusted for differences in prices (such as inflation) between that year and a base year. See inflation and real; compare with current dollar and nominal.
consumer confidence: An index of consumer optimism that is based on surveys of consumers’ attitudes about current and future economic conditions. One such measure, the index of consumer sentiment, is constructed by the University of Michigan’s Survey Research Center. The Conference Board constructs a similar measure, the consumer confidence index.
consumer price index (CPI): An index of the cost of living commonly used to measure inflation. The Bureau of Labor Statistics publishes the CPI-U, an index of consumer prices based on the typical market basket of goods and services consumed by all urban consumers, and the CPI-W, an index of consumer prices based on the typical market basket of goods and services consumed by urban wage earners and clerical workers. (BLS) See inflation.
consumer sentiment index: See consumer confidence.
consumption: In principle, the value of goods and services purchased and used up during a given period by households and governments. In practice, the Bureau of Economic Analysis counts purchases of many long-lasting goods (such as cars and clothes) as consumption even though the goods are not used up. Consumption by households alone is also called consumer spending. See national income and product accounts.
contract authority: Authority provided by law to enter into contracts or incur other obligations in advance of, or in excess of, funds available for that purpose. Although it is a form of budget authority, contract authority does not provide the funds to make payments. Those funds must be provided later, usually in a subsequent appropriation act (called a liquidating appropriation). Contract authority differs from a federal agency’s inherent authority to enter into contracts, which may be exercised only within the limits of available appropriations. See appropriation act, budget authority, and obligation.
core inflation: A measure of the rate of inflation that excludes changes in the prices of food and energy. See consumer price index, inflation, and personal consumption expenditure price index.
cost-of-living adjustment (COLA): An annual increase in payments to reflect price inflation.
CPI: See consumer price index.
credit reform: A system of budgeting and accounting for federal credit activities that focuses on the cost of subsidies conveyed in federal credit assistance. The system was established by the Federal Credit Reform Act of 1990 and took effect at the beginning of fiscal year 1992. See credit subsidy, financing account, liquidating account, and program account.
credit subsidy: The estimated long-term cost to the federal government of a direct loan or loan guarantee. That cost is calculated on the basis of net present value, excluding federal administrative costs and any incidental effects on revenues or outlays. For direct loans, the subsidy cost is the net present value of loan disbursements minus repayments of interest and principal, adjusted for estimated defaults, prepayments, fees, penalties, and other recoveries. For loan guarantees, the subsidy cost is the net present value of estimated payments by the government to cover defaults and delinquencies, interest subsidies, or other payments, offset by any payments to the government, including origination and other fees, penalties, and recoveries. See outlays and present value.
current-account balance: A summary measure of a country’s current transactions with the rest of the world, including net exports, net unilateral transfers, and net factor income (primarily the capital income from foreign property received by residents of a country offset by the capital income from property in that country flowing to residents of foreign countries). (BEA) See net exports and unilateral transfers.
current dollar: A measure of spending or revenues in a given year that has not been adjusted for differences in prices (such as inflation) between that year and a base year. See inflation and nominal; compare with constant dollar and real.
current year: The fiscal year in progress. See fiscal year.
cyclical deficit or surplus: The part of the federal budget deficit or surplus that results from the business cycle. The cyclical component reflects the way in which the deficit or surplus automatically increases or decreases during economic expansions or recessions. (CBO) See business cycle, deficit, expansion, recession, and surplus; compare with cyclically adjusted budget deficit or surplus.
cyclically adjusted budget deficit or surplus: The level of the federal budget deficit or surplus that would occur under current law if the influence of the business cycle was removed—that is, if the economy operated at potential gross domestic product (GDP). (CBO) See business cycle, deficit, potential gross domestic product, and surplus; compare with cyclical deficit or surplus.
Debt: In the case of the federal government, the total value of outstanding bills, notes, bonds, and other debt instruments issued by the Treasury and other federal agencies. That debt is referred to as federal debt or gross debt. It has two components: debt held by the public (federal debt held by nonfederal investors, including the Federal Reserve System) and debt held by government accounts (federal debt held by federal government trust funds, deposit insurance funds, and other federal accounts). Debt subject to limit is federal debt that is subject to a statutory limit on the total amount issued. The limit applies to gross federal debt except for a small portion of the debt issued by the Treasury and all of the small amount of debt issued by other federal agencies (primarily the Tennessee Valley Authority and the Postal Service).
debt service: Payment of scheduled interest obligations on outstanding debt. As used in The Budget and Economic Outlook, debt service refers to a change in interest payments resulting from a change in estimates of the deficit or surplus. See deficit, net interest, and surplus.
deficit: The amount by which the federal government’s total outlays exceed its total revenues in a given period, typically a fiscal year. The primary deficit is that total deficit excluding net interest. See fiscal year, net interest, outlays, and revenues; compare with surplus.
Deficit Control Act: See Balanced Budget and Emergency Deficit Control Act of 1985.
deflation: A drop in price levels that is so broadly based that general indexes of prices, such as the consumer price index, register continuing declines. Deflation is usually caused by a collapse in aggregate demand. See aggregate demand and consumer price index.
demand: See aggregate demand and domestic demand.
deposit insurance: The guarantee by a federal agency that an individual depositor at a participating depository institution will receive the full amount of the deposit (up to $100,000) if the institution becomes insolvent.
depreciation: A decline in the value of a currency, financial asset, or capital good. When applied to a capital good, depreciation usually refers to loss of value because of obsolescence, wear, or destruction (as by fire or flood) and is also called consumption of fixed capital. Book depreciation (also known as tax depreciation) is the depreciation that the tax code allows businesses to deduct when they calculate their taxable profits. It typically occurs at a faster rate than economic depreciation, which is the actual decline in the value of an asset. Both measures of depreciation appear as part of the national income and product accounts. See book profits and national income and product accounts.
devaluation: The act of a government to lower the fixed exchange rate of its currency. The government implements a devaluation by announcing that it will no longer maintain the existing rate by buying and selling its currency at that rate. See exchange rate.
direct spending: Synonymous with mandatory spending, direct spending is the budget authority provided by laws other than appropriation acts and the outlays that result from that budget authority. (As used in The Budget and Economic Outlook, direct spending refers only to the outlays that result from budget authority provided in laws other than appropriation acts.) See appropriation act, budget authority, and outlays; compare with discretionary spending and entitlement.
discount rate: The interest rate that the Federal Reserve System charges on a loan it makes to a bank. Such loans, when allowed, enable a bank to meet its reserve requirements without reducing its lending. Alternatively, the discount rate is the interest rate used to compute the present value of future payments (such as for pension plans). See Federal Reserve System and present value.
discouraged workers: Jobless people who are available for work but not actively seeking it because they think they have poor prospects of finding a job. Discouraged workers are not included in measures of the labor force or the unemployment rate. (BLS) See labor force and unemployment rate.
discretionary spending: The budget authority that is provided and controlled by appropriation acts and the outlays that result from that budget authority. See appropriation act, budget authority, and outlays; compare with direct spending.
discretionary spending limits (or caps): Statutory ceilings imposed on the amount of budget authority provided in appropriation acts in a fiscal year and on the outlays that are made in that year. The limits originally were established in the Budget Enforcement Act of 1990. Under that law, if the estimated budget authority provided in all appropriation acts for a fiscal year (or the outlays resulting from that budget authority) exceeded the spending limit for that year, a sequestration—a cancellation of budget authority provided for programs funded by appropriation acts—would be triggered. All discretionary spending limits and the sequestration procedure to enforce them expired on September 30, 2002. See appropriation act, Balanced Budget and Emergency Deficit Control Act of 1985, budget authority, Budget Enforcement Act of 1990, discretionary spending, fiscal year, outlays, and sequestration.
disposable personal income: Personal income—the income that individuals receive, including transfer payments—minus the taxes and fees that individuals pay to governments. (BEA) See transfer payments.
domestic demand: Total purchases of goods and services, regardless of their origin, by U.S. consumers, businesses, and governments during a given period. Domestic demand equals gross domestic product minus net exports. (BEA) See gross domestic product and net exports; compare with aggregate demand.
ECI: See employment cost index.
Economic Growth and Tax Relief Reconciliation Act of 2001 (Public Law 107-16): This law, also known as EGTRRA, significantly reduced tax liabilities (the amount of tax owed) over the 2001–2010 period by cutting individual income tax rates, increasing the child tax credit, repealing estate taxes, raising deductions for married couples who file joint returns, increasing tax benefits for pensions and individual retirement accounts, and creating additional tax benefits for education. The law phased in many of those changes over time, including some that are not fully effective until 2010. Although some of the law’s provisions have been made permanent, most are scheduled to expire on or before December 31, 2010. For legislation that modified provisions of EGTRRA, see Jobs and Growth Tax Relief Reconciliation Act of 2003.
economic profits: Corporations’ profits, adjusted to remove distortions in depreciation allowances caused by tax rules and to exclude the effect of inflation on the value of inventories. Economic profits are a better measure of profits from current production than are the book profits reported by corporations. Economic profits are referred to as "corporate profits with inventory valuation and capital consumption adjustments" in the national income and product accounts. (BEA) See book profits, depreciation, inflation, inventories, and national income and product accounts.
effective tax rate: The ratio of taxes paid to a given tax base. For individual income taxes, the effective tax rate is typically expressed as the ratio of taxes paid to adjusted gross income. For corporate income taxes, it is the ratio of taxes paid to book profits. For some purposes—such as calculating an overall tax rate on all income—an effective tax rate is computed on a base that includes the untaxed portion of Social Security benefits, interest on tax-exempt bonds, and similar items. It can also be computed on a base of personal income as measured by the national income and product accounts. The effective tax rate is a useful measure because the tax code’s various exemptions, credits, deductions, and tax rates make actual ratios of taxes paid to income very different from statutory tax rates. See adjusted gross income and book profits; compare with marginal tax rate and statutory tax rate.
EGTRRA: See Economic Growth and Tax Relief Reconciliation Act of 2001.
employment: Work performed or services rendered in exchange for compensation. Two estimates of employment are commonly used. One comes from the so-called establishment survey of employers (the Department of Labor’s Current Employment Statistics Survey), which measures employment as the estimated number of nonfarm wage and salary jobs. (Thus, a person with more than one job may be counted more than once.) The other estimate comes from the so-called household survey (the Census Bureau’s Current Population Survey), which measures employment as the estimated number of people employed. (Thus, someone with more than one job is counted only once.) The household survey is based on a smaller sample than the establishment survey and therefore yields a more volatile estimate of employment. See compensation and unemployment rate.
employment cost index (ECI): An index of the weighted-average cost of an hour of labor—comprising the cost to the employer of wage and salary payments, employee benefits, and payroll taxes for social insurance programs, such as Social Security. The ECI is structured so that it is not affected by changes in the mix of occupations in the labor force or the mix of employment by industry. (BLS)
entitlement: A legal obligation of the federal government to make payments to a person, group of people, business, unit of government, or similar entity that meets the eligibility criteria set in law and for which the budget authority is not provided in advance in an appropriation act. Spending for entitlement programs is controlled through those programs’ eligibility criteria and benefit or payment rules. The best-known entitlements are the government’s major benefit programs, such as Social Security and Medicare. See appropriation act and budget authority; compare with direct spending.
establishment survey: See employment.
exchange rate: The number of units of a foreign currency that can be bought with one unit of the domestic currency, or vice versa.
excise tax: A tax levied on the purchase of a specific type of good or service, such as tobacco products or air transportation services.
expansion: A phase of the business cycle that begins when gross domestic product exceeds its previous peak and extends until gross domestic product reaches its next peak. (NBER) See business cycle and gross domestic product; compare with recession and recovery.
expenditure account: An account established within federal funds and trust funds to record appropriations, obligations, and outlays (as well as offsetting collections) that are usually financed from an associated receipt account. See federal funds, obligation, outlays, and trust funds; compare with receipt account.
Fan chart: A graphic representation of CBO’s baseline projection of the budget deficit or surplus that includes not only a single line representing the outcome expected under the baseline’s economic assumptions but also the various possible outcomes surrounding that line, based on the reasonable expectations of error in the underlying economic and technical assumptions. (CBO calculates those reasonable expectations of error on the basis of the accuracy of its own past projections, adjusted for differences in legislation.) See deficit and surplus.
federal funds: In the federal accounting structure, all accounts through which collections of money and expenditures are recorded, except those classified by law as trust funds. Federal funds include several types of funds, one of which is the general fund. See general fund; compare with trust funds.
federal funds rate: The interest rate that financial institutions charge each other for overnight loans of their monetary reserves. A rise in the federal funds rate (compared with other short-term interest rates) suggests a tightening of monetary policy, whereas a fall suggests an easing. (FRB) See monetary policy and short-term interest rate.
Federal Open Market Committee: The group within the Federal Reserve System that determines the stance of monetary policy. The open-market desk at the Federal Reserve Bank of New York implements that policy with open-market operations (the purchase or sale of government securities), which influence short-term interest rates—especially the federal funds rate—and the growth of the money supply. The committee is composed of 12 members, including the 7 members of the Board of Governors of the Federal Reserve System, the president of the Federal Reserve Bank of New York, and a rotating group of 4 of the other 11 presidents of the regional Federal Reserve Banks. See federal funds rate, Federal Reserve System, monetary policy, and short-term interest rate.
Federal Reserve System: The central bank of the United States. The Federal Reserve is responsible for setting the nation’s monetary policy and overseeing credit conditions. See central bank and monetary policy.
financing account: A nonbudgetary account required for a credit program (by the Federal Credit Reform Act of 1990) that holds balances, receives credit subsidy payments from the program account, and records all cash flows with the public that result from obligations or commitments made under the program since October 1, 1991. The cash flow in each financing account for a fiscal year is shown in the federal budget as an "other means of financing." See credit reform, credit subsidy, means of financing, and program account; compare with liquidating account.
fiscal policy: The government’s tax and spending policies, which influence the amount and maturity of government debt as well as the level, composition, and distribution of national output and income. See debt.
fiscal year: A yearly accounting period. The federal government’s fiscal year begins October 1 and ends September 30. Fiscal years are designated by the calendar years in which they end—for example, fiscal year 2009 will begin on October 1, 2008, and end on September 30, 2009. The budget year is the fiscal year for which the budget is being considered; in relation to a session of Congress, it is the fiscal year that starts on October 1 of the calendar year in which that session of Congress began. See out-year.
foreign direct investment: Financial investment by which a person or an entity acquires a lasting interest in, and a degree of influence over the management of, a business enterprise in a foreign country. (BEA)
forward funding: The provision of budget authority that becomes available for obligation in the last quarter of a fiscal year and remains available during the following fiscal year. This form of funding typically finances ongoing education grant programs. See budget authority, fiscal year, and obligation; compare with advance appropriation, obligation delay, and unobligated balances.
GDI: See gross domestic income.
GDP: See gross domestic product.
GDP gap: The difference between potential and actual gross domestic product, expressed as a percentage of potential GDP. See gross domestic product and potential gross domestic product.
GDP price index: A summary measure of the prices of all goods and services that make up gross domestic product. The change in the GDP price index is used as a measure of inflation in the overall economy. See gross domestic product and inflation.
general fund: One category of federal funds in the government’s accounting structure. The general fund records all revenues and offsetting receipts not earmarked by law for a specific purpose and all spending financed by those revenues and receipts. See federal funds, offsetting receipts, and revenues; compare with trust funds.
GNP: See gross national product.
grants: Transfer payments from the federal government to state and local governments or other recipients to help fund projects or activities that do not involve substantial federal participation. See transfer payments.
grants-in-aid: Grants from the federal government to state and local governments to help provide for programs of assistance or service to the public.
gross debt: See debt.
gross domestic income (GDI): The sum of all income earned in the domestic production of goods and services. In theory, GDI should equal gross domestic product, but measurement difficulties leave a statistical discrepancy between the two. (BEA) See gross domestic product.
gross domestic product (GDP): The total market value of goods and services produced domestically during a given period. That value is conceptually equal to gross domestic income, but measurement difficulties result in a statistical discrepancy between the two. The components of GDP are consumption (both household and government), gross investment (both private and government), and net exports. (BEA) See consumption, gross investment, and net exports.
gross investment: A measure of additions to the capital stock that does not subtract depreciation of existing capital. See capital and depreciation.
gross national product (GNP): The total market value of goods and services produced during a given period by labor and capital supplied by residents of a country, regardless of where the labor and capital are located. That value is conceptually equal to the total income accruing to residents of the country during that period (national income). GNP differs from gross domestic product primarily by including the capital income that residents earn from investments abroad and excluding the capital income that nonresidents earn from domestic investment. See gross domestic product and national income.
Home equity: The value that an owner has in a home, calculated by subtracting from the home’s current market value the value of any outstanding mortgage (or other loan) secured by the home.
household survey: See employment.
Inflation: Growth in a general measure of prices, usually expressed as an annual rate of change. See consumer price index, core inflation, GDP price index, and personal consumption expenditure price index.
inventories: Stocks of goods held by businesses for further processing or for sale. (BEA)
investment: Physical investment is the current product set aside during a given period to be used for future production—in other words, an addition to the capital stock. As measured by the national income and product accounts, private domestic investment consists of investment in residential and nonresidential structures, producers’ durable equipment, and the change in business inventories. Financial investment is the purchase of a financial security, such as a stock, bond, or mortgage. Investment in human capital is spending on education, training, health services, and other activities that increase the productivity of the workforce. Investment in human capital is not treated as investment by the national income and product accounts. See capital, inventories, national income and product accounts, and productivity.
JCWAA: See Job Creation and Worker Assistance Act of 2002.
JGTRRA: See Jobs and Growth Tax Relief Reconciliation Act of 2003.
Job Creation and Worker Assistance Act of 2002 (Public Law 107-147): This law reduced business taxes by allowing businesses to immediately deduct a portion of the cost of purchases of capital goods, increasing and extending certain other deductions and exemptions, and expanding the ability of unprofitable corporations to receive refunds of past taxes paid. Those provisions expire on various dates. The law also provided tax benefits for areas of New York City damaged on September 11, 2001, and additional weeks of unemployment benefits to recipients who exhausted their eligibility for regular state benefits. Most of the law’s provisions have expired or have been extended in subsequent legislation. See Jobs and Growth Tax Relief Reconciliation Act of 2003.
Jobs and Growth Tax Relief Reconciliation Act of 2003 (Public Law 108-27): This law reduced taxes by advancing to 2003 the effective date of several tax reductions previously enacted in EGTRRA. It also increased the exemption amount for the individual alternative minimum tax, reduced the tax rates for income from dividends and capital gains, and expanded the portion of capital purchases that businesses could immediately deduct under JCWAA. Those provisions expire on various dates. The law also provided an estimated $20 billion for fiscal relief to states. See capital gains and losses, Economic Growth and Tax Relief Reconciliation Act of 2001, and Job Creation and Worker Assistance Act of 2002.
Labor force: The number of people age 16 or older in the civilian noninstitutional population who have jobs or who are available for work and are actively seeking jobs. (The civilian noninstitutional population excludes members of the armed forces on active duty and people in penal or mental institutions or in homes for the elderly or infirm.) The labor force participation rate is the labor force as a percentage of the civilian noninstitutional population age 16 or older. (BLS) See potential labor force.
labor productivity: See productivity.
liquidating account: A budgetary account associated with a credit program that records all cash flows resulting from direct loan obligations and loan guarantee commitments made under that program before October 1, 1991. See credit reform; compare with financing account and program account.
liquidity: The ease with which an asset can be sold for cash. An asset is highly liquid if it comes in standard units that are traded daily in large amounts by many buyers and sellers. Among the most liquid of assets are U.S. Treasury securities.
long-term interest rate: The interest rate earned by a note or bond that matures in 10 or more years.
Mandatory spending: See direct spending.
marginal tax rate: The tax rate that would apply to an additional dollar of a taxpayer’s income. Compare with effective tax rate and statutory tax rate.
MBSs: See mortgaged-backed securities.
means of financing: Means by which a budget deficit is financed or a surplus is used. Means of financing are not included in the budget totals. The primary means of financing is borrowing from the public. In general, the cumulative amount borrowed from the public (debt held by the public) will increase if there is a deficit and decrease if there is a surplus, although other factors can affect the amount that the government must borrow. Those factors, known as other means of financing, include reductions (or increases) in the government’s cash balances, seigniorage, changes in outstanding checks, changes in accrued interest costs included in the budget but not yet paid, and cash flows reflected in credit financing accounts. See debt, deficit, financing account, seigniorage, and surplus.
monetary policy: The strategy of influencing changes in the money supply and interest rates to affect output and inflation. An "easy" monetary policy suggests faster growth of the money supply and initially lower short-term interest rates intended to increase aggregate demand, but it may lead to higher inflation. A "tight" monetary policy suggests slower growth of the money supply and higher interest rates in the near term in an attempt to reduce inflationary pressure by lowering aggregate demand. The Federal Reserve System sets monetary policy in the United States. See aggregate demand, Federal Reserve System, inflation, and short-term interest rate.
mortgage-backed securities (MBSs): Securities issued by financial institutions to investors with the payments of interest and principal backed by the payments on a package of mortgages. MBSs are structured by their sponsors to create multiple classes of claims, or tranches, of different seniority, based on the cash flows from the underlying mortgages. Investors holding securities in the safest, or most senior, tranche stand first in line to receive payments from borrowers and require the lowest contractual interest rate of all the tranches. Investors holding the least senior securities stand last in line to receive payments, after all more senior claims have been paid. Hence, they are first in line to absorb losses on the underlying mortgages. In return for assuming that risk, holders of the least senior tranche require the highest contractual interest rate of all the tranches.
National income: Total income earned by U.S. residents from all sources, including employees’ compensation (wages, salaries, benefits, and employers’ share of payroll taxes for social insurance programs), corporate profits, net interest, rental income, and proprietors’ income. See gross national product.
national income and product accounts (NIPAs): Official U.S. accounts that track the level and composition of gross domestic product, the prices of its components, and the way in which the costs of production are distributed as income. (BEA) See gross domestic product.
national saving: Total saving by all sectors of the economy: personal saving, business saving (corporate after-tax profits not paid as dividends), and government saving (budget surpluses). National saving represents all income not consumed, publicly or privately, during a given period. (BEA) See national income, net national saving, personal saving, and surplus.
natural rate of unemployment: The rate of unemployment arising from all sources except fluctuations in aggregate demand. Those sources include frictional unemployment, which is associated with normal turnover of jobs, and structural unemployment, which includes unemployment caused by mismatches between the skills of available workers and the skills necessary to fill vacant positions and unemployment caused when wages exceed their market-clearing levels because of institutional factors, such as legal minimum wages, the presence of unions, social conventions, or employer wage-setting practices intended to increase workers’ morale and effort. See aggregate demand and unemployment rate.
net exports: The exports of goods and services produced in a country minus the country’s imports of goods and services produced elsewhere; also referred to as the trade balance.
net federal government saving: A term used in the national income and product accounts to identify the difference between federal current receipts and federal current expenditures (including consumption of fixed capital). When receipts exceed expenditures, net federal government saving is positive (formerly identified in the national income and product accounts as a federal government surplus); when expenditures exceed receipts, net federal government saving is negative (formerly identified in the national income and product accounts as a federal government deficit). See capital and national income and product accounts.
net interest: In the federal budget, net interest comprises the government’s interest payments on debt held by the public (as recorded in budget function 900), offset by interest income that the government receives on loans and cash balances and by earnings of the National Railroad Retirement Investment Trust. See budget function and debt.
net national saving: National saving minus depreciation of physical capital. See capital, depreciation, and national saving.
NIPAs: See national income and product accounts.
nominal: A measure based on current-dollar value. The nominal level of income or spending is measured in current dollars. The nominal interest rate on debt selling at par is the ratio of the current-dollar interest paid in any year to the current-dollar value of the debt when it was issued. The nominal interest rate on debt initially issued or now selling at a discount includes as a payment the estimated yearly equivalent of the difference between the redemption price and the discounted price. The nominal exchange rate is the rate at which a unit of one currency trades for a unit of another currency. See current dollar; compare with real.
Obligation: A legally binding commitment by the federal government that will result in outlays, immediately or in the future. See outlays.
obligation delay: Legislation that precludes the obligation of an amount of budget authority provided in an appropriation act or in some other law until some time after the first day on which that budget authority would normally be available. For example, language in an appropriation act for fiscal year 2009 that precludes obligation of an amount until March 1 is an obligation delay; without that language, the amount would have been available for obligation on October 1, 2008 (the first day of fiscal year 2009). See appropriation act, budget authority, fiscal year, and obligation; compare with advance appropriation, forward funding, and unobligated balances.
obligation limitation: A provision of a law or legislation that restricts or reduces the availability of budget authority that would have become available under another law. Typically, an obligation limitation is included in an appropriation act. The limitation may affect budget authority provided in that act, but more often, it affects direct spending that has been provided in an authorization act. Generally, when an appropriation act routinely places an obligation limitation on direct spending, the limitation is treated as a discretionary resource and the associated outlays are treated as discretionary spending. See appropriation act, authorization act, budget authority, direct spending, discretionary spending, and outlays.
off-budget: Spending or revenues sometimes excluded from the budget totals by law. The revenues and outlays of the two Social Security trust funds (the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund) and the transactions of the Postal Service are off-budget. See outlays, revenues, and trust funds.
offsetting collections: Funds collected by government agencies from other government accounts or from the public in business-like or market-oriented transactions that are required by law to be credited directly to an expenditure account. Offsetting collections, which are treated as negative budget authority and outlays, are credits against the budget authority and outlays (either direct or discretionary spending) of the account to which they are credited. Collections that result from the government’s exercise of its sovereign or governmental powers are ordinarily classified as revenues, although they are classified as offsetting collections when the law requires it. See budget authority, direct spending, discretionary spending, expenditure account, and outlays; compare with offsetting receipts and revenues.
offsetting receipts: Funds collected by government agencies from other government accounts or from the public in business-like or market-oriented transactions that are credited to a receipt account. Offsetting receipts, which are treated as negative budget authority and outlays, offset gross budget authority and outlays in calculations of total direct spending. Collections that result from the government’s exercise of its sovereign or governmental powers are ordinarily classified as revenues, although they are classified as offsetting receipts when the law requires it. See budget authority, direct spending, outlays, and receipt account; compare with offsetting collections and revenues.
other means of financing: See means of financing.
outlays: Spending to pay a federal obligation. Outlays may pay for obligations incurred in a prior fiscal year or in the current year; hence, they flow partly from unexpended balances of prior-year budget authority and partly from budget authority provided for the current year. For most categories of spending, outlays are recorded on a cash accounting basis. However, outlays for interest on debt held by the public are recorded on an accrual accounting basis, and outlays for direct loans and loan guarantees (since credit reform) reflect estimated subsidy costs instead of cash transactions. See accrual accounting, budget authority, cash accounting, credit reform, debt, fiscal year, and obligation.
out-year: A fiscal year following the budget year. See fiscal year.
Pay-as-you-go (PAYGO): Procedures established in the Budget Enforcement Act of 1990 (statutory PAYGO) and in House and Senate rules that are intended to ensure that all laws that affect direct spending or revenues are budget neutral. Under statutory PAYGO, the budgetary effect of each such law was estimated for a five-year period and entered on the PAYGO scorecard. If, in any budget year, the deficit increased as a result of the total budgetary effects of laws on that scorecard, a PAYGO sequestration—a cancellation of budgetary resources available for direct spending programs—would be triggered. Statutory PAYGO and its sequestration procedure were rendered ineffective on December 2, 2002, when Public Law 107-312 reduced all PAYGO balances to zero. In addition, the House and Senate each have a PAYGO rule enforced by a point of order. Since 1993, the Senate has had a rule against considering legislation affecting direct spending or revenues that is expected to increase (or cause) an on-budget deficit. That rule was adopted in its current form in the budget resolution for 2008 (H. Con. Res. 21, 110th Congress). The House rule (established by H. Res. 6, 110th Congress) applies to legislation affecting direct spending or revenues that has the net effect of increasing the deficit or decreasing the surplus. Unlike the Senate rule, the House rule applies on a bill-by-bill basis without reference to cumulative effects. See Balanced Budget and Emergency Deficit Control Act of 1985, Budget Enforcement Act of 1990, deficit, direct spending, fiscal year, point of order, revenues, sequestration, and surplus.
PCE price index: See personal consumption expenditure price index.
personal consumption expenditure price index: A summary measure of the prices of all goods and services that make up personal consumption expenditures and an alternative to the consumer price index as a measure of inflation. See consumption, consumer price index, and inflation.
personal income: See disposable personal income.
personal saving: Saving by households. Personal saving equals disposable personal income minus spending for consumption and interest payments. The personal saving rate is personal saving as a percentage of disposable personal income. (BEA) See consumption and disposable personal income; compare with private saving.
point of order: The procedure by which a member of a legislature (or similar body) questions an action that is being taken, or that is proposed to be taken, as contrary to that body’s rules, practices, or precedents.
potential gross domestic product: The level of real gross domestic product that corresponds to a high level of resource (labor and capital) use. (Procedures for calculating potential GDP are described in CBO’s Method for Estimating Potential Output: An Update, August 2001.) See gross domestic product, potential output, and real.
potential labor force: The labor force adjusted for movements in the business cycle. See business cycle and labor force.
potential output: The level of production that corresponds to a high level of resource (labor and capital) use. Potential output for the national economy is also referred to as potential gross domestic product. (Procedures for calculating potential output are described in CBO’s Method for Estimating Potential Output: An Update, August 2001.) See potential gross domestic product.
present value: A single number that expresses a flow of current and future income (or payments) in terms of an equivalent lump sum received (or paid) today. The present value depends on the rate of interest used (the discount rate). For example, if $100 is invested on January 1 at an annual interest rate of 5 percent, it will grow to $105 by January 1 of the next year. Hence, at an annual 5 percent interest rate, the present value of $105 payable a year from today is $100.
primary deficit: See deficit.
private saving: Saving by households and businesses. Private saving is equal to personal saving plus after-tax corporate profits minus dividends paid. (BEA) Compare with personal saving.
productivity: Average real output per unit of input. Labor productivity is average real output per hour of labor. The growth of labor productivity is defined as the growth of real output that is not explained by the growth of labor input alone. Total factor productivity is average real output per unit of combined labor and capital services. The growth of total factor productivity is defined as the growth of real output that is not explained by the growth of labor and capital. Labor productivity and total factor productivity differ in that increases in capital per worker raise labor productivity but not total factor productivity. (BLS) See capital services and real.
program account: A budgetary account associated with a credit program that receives an appropriation of the subsidy cost of that program’s loan obligations or commitments, as well as (in most cases) the program’s administrative expenses. From the program account, the subsidy cost is disbursed to the applicable financing account. See credit subsidy and financing account; compare with liquidating account.
Real: Adjusted to remove the effects of inflation. Real output represents the quantity, rather than the dollar value, of goods and services produced. Real income represents the power to purchase real output. Real data at the finest level of disaggregation are constructed by dividing the corresponding nominal data, such as spending or wage rates, by a price index. Real aggregates, such as real gross domestic product, are constructed by a procedure that allows the real growth of the aggregate to reflect the real growth of its components, appropriately weighted by the importance of the components. A real interest rate is a nominal interest rate adjusted for expected inflation; it is often approximated by subtracting an estimate of the expected inflation rate from the nominal interest rate. See inflation; compare with current dollar and nominal.
real trade-weighted value of the dollar: See trade-weighted value of the dollar.
receipt account: An account established within federal funds and trust funds to record offsetting receipts or revenues credited to that fund. The receipt account typically finances the obligations and outlays from an associated expenditure account. See federal funds, outlays, and trust funds; compare with expenditure account.
recession: A phase of the business cycle that extends from a peak to the next trough and that is characterized by a substantial decline in overall business activity—output, income, employment, and trade—for at least several months. As a rule of thumb, though not an official measure, recessions are often identified by a decline in real gross domestic product for at least two consecutive quarters. (NBER) See business cycle, gross domestic product, and real; compare with expansion.
reconciliation: A special Congressional procedure often used to implement the revenue and spending targets established in the budget resolution. The budget resolution may contain reconciliation instructions, which direct Congressional committees to make changes in laws under their jurisdictions that affect revenues or direct spending to achieve a specified budgetary result. The legislation to implement those instructions is usually combined into a comprehensive reconciliation bill, which is considered under special rules. Reconciliation affects revenues, direct spending, and offsetting receipts but usually not discretionary spending. See budget resolution, direct spending, discretionary spending, offsetting receipts, and revenues.
recovery: A phase of the business cycle that lasts from a trough until overall economic activity returns to the level it reached at the previous peak. (NBER) See business cycle.
rescission: The withdrawal of authority to incur financial obligations that was previously provided by law and has not yet expired. See budget authority and obligation.
revenues: Funds collected from the public that arise from the government’s exercise of its sovereign or governmental powers. Federal revenues come from a variety of sources, including individual and corporate income taxes, excise taxes, customs duties, estate and gift taxes, fees and fines, payroll taxes for social insurance programs, and miscellaneous receipts (such as earnings of the Federal Reserve System, donations, and bequests). Federal revenues are also known as federal governmental receipts. Compare with offsetting collections and offsetting receipts.
risk premium: The additional return that investors require to hold assets whose returns are more variable than those of riskless assets. The risk can arise from many sources, such as the possibility of default (in the case of corporate or municipal debt) or the volatility of interest rates or earnings (in the case of corporate stocks).
S corporation: A domestically owned corporation with no more than 100 owners who have elected to pay taxes under Subchapter S of the Internal Revenue Code. An S corporation is taxed like a partnership: It is exempt from the corporate income tax, but its owners pay individual income taxes on all of the firm’s income, even if some of the earnings are retained by the firm.
saving rate: See national saving and personal saving.
savings bond: A nontransferable, registered security issued by the Treasury at a discount and in denominations from $50 to $10,000. The interest earned on savings bonds is exempt from state and local taxation; it is also exempt from federal taxation until the bonds are redeemed or reach maturity.
seigniorage: The gain to the government from the difference between the face value of minted coins put into circulation and the cost of producing them (including the cost of the metal used in the coins). Seigniorage is considered a means of financing and is not included in the budget totals. See means of financing.
sequestration: An enforcement mechanism established in the Balanced Budget and Emergency Deficit Control Act of 1985 that would result in the cancellation of budgetary resources available for a fiscal year. The mechanism enforced the discretionary spending limits and pay-as-you-go (PAYGO) procedures of that law, as amended. A sequestration of discretionary budget authority would occur in a fiscal year if the budget authority or outlays provided in appropriation acts exceeded the applicable discretionary spending limit for that year. A PAYGO sequestration would occur in a fiscal year if the total budgetary impact of laws affecting direct spending and revenues was not deficit neutral in that year. The discretionary spending limits and the sequestration procedure to enforce them expired on September 30, 2002. PAYGO and its sequestration procedure were rendered ineffective on December 2, 2002, when Public Law 107-312 reduced all PAYGO balances to zero. See appropriation act, Balanced Budget and Emergency Deficit Control Act of 1985, budget authority, direct spending, discretionary spending limits, fiscal year, outlays, pay-as-you-go, and revenues.
short-term interest rate: The interest rate earned by a debt instrument (such as a Treasury bill) that will mature within one year.
state and local government security (SLGS): A time deposit sold by the Treasury to issuers of state and local government tax-exempt debt to facilitate compliance with the Internal Revenue Code’s arbitrage provisions, which restrict state and local governments from earning profits by investing bond proceeds in higher yielding investments.
statutory tax rate: A tax rate specified by law. In some cases, such as with individual and corporate income taxes, the statutory tax rate varies with the amount of taxable income. (For example, under the federal corporate income tax, the statutory tax rate for companies with taxable income below $50,000 is 15 percent, whereas the rate for corporations with taxable income greater than $18.3 million is 35 percent.) In other cases, the statutory tax rate is uniform. (For instance, the statutory federal tax rate on gasoline is 18.4 cents per gallon for all taxpayers.) Compare with effective tax rate and marginal tax rate.
Subchapter S corporation: See S corporation.
subsidy cost: See credit subsidy.
surplus: The amount by which the federal government’s total revenues exceed its total outlays in a given period, typically a fiscal year. See fiscal year, outlays, and revenues; compare with deficit.
Tax Increase Prevention Act of 2007 (Public Law 110-166): This law provided relief from the individual alternative minimum tax for the tax year that ended December 31, 2007. See alternative minimum tax.
Treasury bill: A security issued by the Treasury with a maturity of 28, 91, or 182 days. Interest on a Treasury bill is calculated as the difference between the purchase price and the value paid at redemption.
Treasury bond: A fixed-rate, interest-bearing security issued by the Treasury that matures in 30 years.
Treasury inflation-protected security (TIPS): A marketable security with a maturity of 5, 10, or 20 years issued by the Treasury that is designed to protect investors from inflation. The principal of a TIPS is linked to the consumer price index, and at maturity, the security pays the greater of the original or the adjusted principal. The security makes semiannual interest payments based on a fixed rate of interest and the adjusted principal amount.
Treasury note: A fixed-rate, interest-bearing security issued by the Treasury with a maturity of 2, 5, or 10 years.
total factor productivity: See productivity.
trade balance: See net exports.
trade-weighted value of the dollar: The value of the U.S. dollar relative to the currencies of U.S. trading partners, with the weight of each country’s currency equal to that country’s share of U.S. trade. The real trade-weighted value of the dollar is an index of the trade-weighted value of the dollar whose movement is adjusted for the difference between U.S. inflation and inflation among U.S. trading partners. An increase in the real trade-weighted value of the dollar means that the price of U.S.-produced goods and services has increased relative to the price of foreign-produced goods and services. See inflation.
transfer payments: Payments made to a person or organization for which no current or future goods or services are required in return. Federal transfer payments include Social Security and unemployment benefits. (BEA)
trust funds: In the federal accounting structure, accounts designated by law as trust funds (regardless of any other meaning of that term). Trust funds record the revenues, offsetting receipts, or offsetting collections earmarked for the purpose of the fund, as well as budget authority and outlays of the fund that are financed by those revenues or receipts. The federal government has more than 200 trust funds. The largest and best known finance major benefit programs (including Social Security and Medicare) and infrastructure spending (such as the Highway Trust Fund and the Airport and Airway Trust Fund). See budget authority, offsetting collections, offsetting receipts, outlays, and revenues; compare with federal funds.
Unemployment rate: The number of jobless people who are available for work and are actively seeking jobs, expressed as a percentage of the labor force. (BLS) See discouraged workers and labor force.
unified budget: The entire federal budget, which consolidates all on-budget and off-budget outlays and revenues. See off-budget, outlays, and revenues.
unilateral transfers: Payments from sources within the United States to sources abroad (and vice versa) that are not made in exchange for goods or services. Examples include a private gift sent abroad, a pension payment from a U.S. employer to an eligible retiree living in a foreign country, or taxes paid to the United States by people living overseas.
unobligated balances: The portion of budget authority that has not yet been obligated. When budget authority is provided for one fiscal year, any unobligated balances at the end of that year expire and are no longer available for obligation. When budget authority is provided for a specific number of years, any unobligated balances are carried forward and are available for obligation during the years specified. When budget authority is provided for an unspecified number of years, the unobligated balances are carried forward indefinitely, until one of the following occurs: the balances are expended or rescinded, the purpose for which they were provided is accomplished, or no disbursements have been made for two consecutive years. See budget authority, fiscal year, and obligation; compare with advance appropriation, forward funding, and obligation delay.
user fee: Money that the federal government charges for services or for the sale or use of federal goods or resources that generally provide benefits to the recipients beyond those that may accrue to the general public. The amount of the fee is typically related to the cost of the service provided or the value of the good or resource used. In the federal budget, user fees can be classified as offsetting collections, offsetting receipts, or revenues. See offsetting collections, offsetting receipts, and revenues.
Yield: The average annual rate of return on an investment held over a period of time. For a fixed-income security, such as a bond, the yield is determined by several factors, including the security’s interest rate, face
value, and purchase price and the length of time that the security is held. The yield to maturity is the effective interest rate earned on a fixed-income security if it is held until the date on which it comes due for payment.
yield curve: The relationship formed by plotting the yields of otherwise comparable fixed-income securities against their terms to maturity. Typically, yields increase as maturities lengthen. The rate of that increase determines the "steepness" or "flatness" of the yield curve. Ordinarily, a steepening (or flattening) of the yield curve is taken to suggest that short-term interest rates are expected to rise (or fall). See short-term interest rate and yield.