Austerity

Loading the player...

What is 'Austerity'

Austerity is a state of reduced spending and increased frugality in the financial sector. Austerity measures generally refer to the measures taken by governments to reduce expenditures in an attempt to shrink their growing budget deficits.

BREAKING DOWN 'Austerity'

Austerity measures are generally unpopular because they tend to lower the quantity and quality of services and benefits provided by the government. Beginning in 2009, several nations were forced to embark on unprecedented austerity measures. These measures were necessitated by budget deficits that soared to record levels because of actions these countries took to stimulate their economies following the massive credit crisis and global recession of 2008.

RELATED TERMS
  1. Budget Deficit

    A status of financial health in which expenditures exceed revenue. ...
  2. Deficit

    The amount by which a resource falls short of a mark, most often ...
  3. Grexit

    Grexit, an abbreviation for "Greek exit," refers to Greece's ...
  4. Fiscal Deficit

    When a government's total expenditures exceed the revenue that ...
  5. Deficit Spending

    When a government's expenditures exceed its revenues, causing ...
  6. Trade Deficit

    An economic measure of a negative balance of trade in which a ...
Related Articles
  1. Economics

    Understanding Austerity

    Austerity is an economic term describing government measures to reduce and eliminate budget deficits.
  2. Economics

    Austerity: When The Government Tightens Its Belt

    When a government tightens its belt in tough economic times the entire nation feels the squeeze.
  3. Economics

    How Budget Deficits Work

    How do governmental and business budget deficits function?
  4. Economics

    Is David Cameron's Austerity Working for Britain?

    Although growth picked up in 2013 and 2014, contrary to Chancellor of the Exchequer George Osborne’s claims, austerity is not working for Britain.
  5. Investing News

    Is A Greek Euro Exit Finally About To Happen?

    The Eurozone crisis involving Greece has been a nagging thorn in the side of the European Union ever since the financial collapse of 2008–2009.
  6. Term

    What's a Deficit?

    A deficit is the amount by which expenses or costs exceed income or revenues.
  7. Economics

    Twin Deficits: Twice The Fun For The U.S

    The U.S. has been running both fiscal and current account deficits for years, but what does it all add up to?
  8. Economics

    A Look at Greece’s Messy Fiscal Policy

    Investigate the muddy fiscal policy, tax problems, and inability to institute austerity that created the Greek crises in 2010 and 2015.
  9. Professionals

    Risk and Return Measures

    Risk and Return Measures
  10. Economics

    The Pros & Cons of a Trade Deficit

    Is a trade deficit, also known as a current account deficit, beneficial or detrimental to a country's economy?
RELATED FAQS
  1. What austerity measures can a country implement to curtail government spending?

    Read about the types of austerity measures that governments can take to reduce deficits, increase revenue and lower public ... Read Answer >>
  2. What are austerity measures?

    Austerity measures are attempts to significantly curtail government spending in an effort to control public-sector debt, ... Read Answer >>
  3. What are the main risks to the economy of a country that has implemented a policy ...

    Learn about the main risks to a country that has implemented a policy of austerity. Austerity implies cutting government ... Read Answer >>
  4. Why have austerity policies failed to stabilize Greece's economy?

    Learn why austerity policies have failed to improve the financial situation in Greece. Austerity seeks to fix a country's ... Read Answer >>
  5. Which countries run the largest budget deficits?

    Discover the countries with the largest budget deficits and what it means. Deficits are influenced by the economy and also ... Read Answer >>
  6. Why would a company choose to operate on a deficit budget in lieu of a balanced budget?

    Learn how companies can strategically use deficit budgets in the short term to get off the ground, expand and work through ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center