Final answer:
A future deductible amount due to a temporary difference between taxable and financial income is referred to as a deferred tax asset. This concept is part of understanding fiscal policies, where individuals and companies react differently to temporary versus permanent changes due to their impact on aggregate demand and tax planning.
Step-by-step explanation:
The term for 'A temporary difference that causes a future deductible amount if the taxable income will be decreased relative to accounting income in the year(s) when the difference reverses' is known as a deferred tax asset. This occurs because the expense is recognized in the financial statements before the tax return.
Consequently, this creates a situation where future taxable income is less than the financial income due to the temporary difference. Since the tax payable in future periods will be less than the tax expense shown in the income statement of the current period, it represents a future economic benefit.
Understanding temporary and permanent fiscal policies is vital. While a temporary tax cut or spending increase lasts only for a short period and then reverts, a permanent change continues indefinitely. Companies and individuals tend to react more significantly to permanent changes than temporary ones because permanent fiscal policies are expected to have a longstanding impact on aggregate demand and the economy.
When you look at an annual budget deficit or surplus, which signifies the difference between tax revenue collected and spending over a fiscal year, one can see how temporary differences may influence tax planning strategies.