Microsoft Word Web glossary doc

Balanced Budget: An annual budget (such as for a government) in which revenues perfectly 
offset expenditures, so that there is neither a deficit nor a surplus. 
Balanced Budget Laws: Laws (usually passed by right-wing governments) which require 
governments to run balanced budgets regardless of the state of the overall economy. These laws 

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have the negative effect of worsening economic downturns – since governments either must 
reduce spending or increase taxes during a recession, in order to offset the impact of the 
recession on its budget, and those fiscal actions deepen the recession. 

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Bank for International Settlements: An international financial regulatory organization based 
in Berne, Switzerland, which designs international regulations regarding capital adequacy and 
other banking practices. The BIS is governed by government appointees from the world’s 
largest capitalist economies. 
Banking Cycle: An economic cycle which results from cyclical changes in the attitudes of 
banks toward lending risk. When economic times are good, bankers become optimistic that their 
loans will be repaid, and hence they expand their lending. More credit means even stronger 
economic times, and so on. The opposite occurs when the economy becomes weaker: bankers 
begin to fear more defaults on their loans, hence they issue fewer loans, and hence the economy 
weakens even further. 
Banks: A company that accepts deposits and issues new loans. It makes profit by charging 
more interest for the loans than it pays on the deposits, as well as through various service 
charges. By issuing new loans (or credit), banks create new money which is essential to 
promoting economic growth and job creation.