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As in the "war on terror" or "terror suspects".
They're distinct things, right? Yes, the goal of terrorism (a tactic) is to cause terror (an emotion), but they are not the same thing. And terrorism is not the only cause of terror either. A "war on terror" would include not only a war on terrorism, but also a war on, I don't know, horror movies. And laws against letting kids ride roller coasters. Or whatever.
(P.S., I support the view that punctuation should be logical; thus, if a period is part of a quotation, it should be inside the quote marks, but if not, as in my first sentence above, it shouldn't.)