Austerity

DEFINITION of 'Austerity'

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.

INVESTOPEDIA EXPLAINS '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. Debt-To-GDP Ratio

    The ratio of a country's national debt to its gross domestic ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects ...
  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. Economic Justice

    Economic justice is a component of social justice. It's a set ...
Related Articles
  1. Do Tax Cuts Stimulate The Economy?
    Taxes

    Do Tax Cuts Stimulate The Economy?

  2. Twin Deficits: Twice The Fun For The ...
    Economics

    Twin Deficits: Twice The Fun For The ...

  3. Breaking Down The U.S. Budget Deficit
    Options & Futures

    Breaking Down The U.S. Budget Deficit

  4. How Is Europe Affecting The Martkets?
    Economics

    How Is Europe Affecting The Martkets?

Hot Definitions
  1. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  2. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  3. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  4. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  5. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
  6. Earnings Multiplier

    An adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used ...