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... • Ex: A senator promises more welfare and public works programs when there is already an inflationary gap. ...
... • Ex: A senator promises more welfare and public works programs when there is already an inflationary gap. ...
Economics: Fiscal and Monetary policy
... taxes on businesses and high income tax payers Sometimes called “Trickle Down Economics” Reagan believed in this; cut corporate tax rate from 48 to 34%, and top income tax rate from 70 to 28% Economy did grow, but at a cost---budget deficits grew ...
... taxes on businesses and high income tax payers Sometimes called “Trickle Down Economics” Reagan believed in this; cut corporate tax rate from 48 to 34%, and top income tax rate from 70 to 28% Economy did grow, but at a cost---budget deficits grew ...
5-1 Fiscal Policy
... help raise productivity and create jobs. Government buys more goods and services. Companies that sell goods to the government can increase productivity and hire new workers. Workers have more $$$ to spend in the economy. This increases productivity in other areas. Adds up to more output and more job ...
... help raise productivity and create jobs. Government buys more goods and services. Companies that sell goods to the government can increase productivity and hire new workers. Workers have more $$$ to spend in the economy. This increases productivity in other areas. Adds up to more output and more job ...
Chapter 7. National Income
... Any increase (decrease) results in the equilibrium level of income increasing (decreasing) by a multiple of the change. The value of the multiplier depends on the slope of the consumption function. The slope of the consumption function depends on the marginal propensity to consume and on the tax rat ...
... Any increase (decrease) results in the equilibrium level of income increasing (decreasing) by a multiple of the change. The value of the multiplier depends on the slope of the consumption function. The slope of the consumption function depends on the marginal propensity to consume and on the tax rat ...
Study Guide 1
... Compare and contrast the various philosophies of Keynesian and Monetarist Economics (i.e. macroeconomic equilibrium, fiscal and monetary policy, flexibility of prices and wages, etc.) Discuss the difference between the Keynesian and Monetarist LRAS curves and why and how their assumptions guide thei ...
... Compare and contrast the various philosophies of Keynesian and Monetarist Economics (i.e. macroeconomic equilibrium, fiscal and monetary policy, flexibility of prices and wages, etc.) Discuss the difference between the Keynesian and Monetarist LRAS curves and why and how their assumptions guide thei ...
Formulas for Macro AP
... Monetary multiplier = 1/RRR Total addition to banking system = 1st loan x money multiplier + initial deposit IF IT’S NEW $ • Amt. of $ a bank can loan = excess reserves = total reserves – (RRR x checkable deposits) • Real interest rate = nominal interest rate – expected inflation rate ...
... Monetary multiplier = 1/RRR Total addition to banking system = 1st loan x money multiplier + initial deposit IF IT’S NEW $ • Amt. of $ a bank can loan = excess reserves = total reserves – (RRR x checkable deposits) • Real interest rate = nominal interest rate – expected inflation rate ...
Triangle of Painful Choices
... amounts to 19 percent of GDP, then we can balance the budget only if our spending on defense and all other non-health activities is 6 percent of GDP (point A). This is roughly half the 2012 spending level. • Higher tax revenues would support correspondingly higher spending for defense and other non- ...
... amounts to 19 percent of GDP, then we can balance the budget only if our spending on defense and all other non-health activities is 6 percent of GDP (point A). This is roughly half the 2012 spending level. • Higher tax revenues would support correspondingly higher spending for defense and other non- ...
Both Fiscal Policy
... Which is NOT true about crowding out? A. It is an economic theory B. It has not occurred in the U.S. (yet….) C. As the national debt ↑, crowding out threatens to increase short term interest rates D. The 800 billion Fiscal Stimulus plan could lead to crowding out in the future… E. All listed are TR ...
... Which is NOT true about crowding out? A. It is an economic theory B. It has not occurred in the U.S. (yet….) C. As the national debt ↑, crowding out threatens to increase short term interest rates D. The 800 billion Fiscal Stimulus plan could lead to crowding out in the future… E. All listed are TR ...
Aggregate Demand - Villanova University
... (ii) Legislative Branch (Congress) Government Spending = G + Transfer Payments Net Taxes = T – Transfers. Fiscal policy deals with the government adjustment of government purchases (G) and net taxes (T). ...
... (ii) Legislative Branch (Congress) Government Spending = G + Transfer Payments Net Taxes = T – Transfers. Fiscal policy deals with the government adjustment of government purchases (G) and net taxes (T). ...
Chapter 13 Fiscal Policy
... economy – not only during downturns when unemployment is high, but also during inflationary upswings. Governments can use certain policies to achieve economic stability; for example, they can spend more money or reduce taxes to cause changes in total spending and aggregate demand. This chapter exami ...
... economy – not only during downturns when unemployment is high, but also during inflationary upswings. Governments can use certain policies to achieve economic stability; for example, they can spend more money or reduce taxes to cause changes in total spending and aggregate demand. This chapter exami ...
u2ch5 - Harper College
... (a) unemployment and (b) the rate of inflation. (a) To reduce unemployment, government must increase total or aggregate spending in the economy to encourage more production and employment. It can do so by increasing its own spending on goods and services and, by reducing taxes, inducing the populati ...
... (a) unemployment and (b) the rate of inflation. (a) To reduce unemployment, government must increase total or aggregate spending in the economy to encourage more production and employment. It can do so by increasing its own spending on goods and services and, by reducing taxes, inducing the populati ...
Keynesian Macroeconomics: Aggregate Demand and the Multiplier
... inventory investment can be unplanned -- if a store fails to sell what it had expected to, it winds up with more inventory than it had expected. Stores with unplanned inventory investment will cut back on orders -resulting in reduced production at the factory, layoffs and recession. ...
... inventory investment can be unplanned -- if a store fails to sell what it had expected to, it winds up with more inventory than it had expected. Stores with unplanned inventory investment will cut back on orders -resulting in reduced production at the factory, layoffs and recession. ...
Fiscal Policy - Economics @ Tallis
... financed through PSNCR • Budget surplus when revenue exceeds spending. This results in a PSDR which pays back previous borrowing • Could also be a balanced budget ...
... financed through PSNCR • Budget surplus when revenue exceeds spending. This results in a PSDR which pays back previous borrowing • Could also be a balanced budget ...
INNOVATION
... Fiscal Policy and the Multiplier Fiscal Policy involves the use of government spending and tax rates to control the economy at a macro level. For example if growth is low and unemployment high either taxes can be cut of government spending can be increased. ...
... Fiscal Policy and the Multiplier Fiscal Policy involves the use of government spending and tax rates to control the economy at a macro level. For example if growth is low and unemployment high either taxes can be cut of government spending can be increased. ...
Two key limits of fiscal policy are coordination with the nation`s
... There is controversy regarding whether these two policies are complementary or act as substitutes to each other for achieving macroeconomic goals. Policy makers are viewed to interact as strategic substitutes when one policy maker's expansionary (contractionary) policies are countered by another pol ...
... There is controversy regarding whether these two policies are complementary or act as substitutes to each other for achieving macroeconomic goals. Policy makers are viewed to interact as strategic substitutes when one policy maker's expansionary (contractionary) policies are countered by another pol ...
Notes for Chapter 12 - FIU Faculty Websites
... “In economics, a multiplier is a factor of proportionality that measures how much an endogenous (independent) variable changes in response to a change in some exogenous (dependent) variable.” 1 “The multiplier effect is the idea that an initial amount of spending (usually by the government) leads to ...
... “In economics, a multiplier is a factor of proportionality that measures how much an endogenous (independent) variable changes in response to a change in some exogenous (dependent) variable.” 1 “The multiplier effect is the idea that an initial amount of spending (usually by the government) leads to ...
Fiscal Policy Chapter 15.1
... Contractionary policy tries to reduce growth by lowering spending and raising taxes During a time where demand is higher than supply, it would cause inflation. So the government might want to slow the economy down. ...
... Contractionary policy tries to reduce growth by lowering spending and raising taxes During a time where demand is higher than supply, it would cause inflation. So the government might want to slow the economy down. ...
Economy 2013-97
... USEFUL TO THINK OF ECONOMIC ISSUES IN TWO PARTS 1. SHORT-RUN “CYCLICAL” ISSUE RELATED TO THE RECESSION AND RECOVERY 2. LONG-RUN “STRUCTURAL” ISSUES RELATED TO OUR ECONOMIC PATH FOR NEXT 50 TO 75 YEARS ...
... USEFUL TO THINK OF ECONOMIC ISSUES IN TWO PARTS 1. SHORT-RUN “CYCLICAL” ISSUE RELATED TO THE RECESSION AND RECOVERY 2. LONG-RUN “STRUCTURAL” ISSUES RELATED TO OUR ECONOMIC PATH FOR NEXT 50 TO 75 YEARS ...
An Intro to Fiscal and Monetary Policy
... Intro to Fiscal and Monetary Policies Unit IV: Finance and Banking and ...
... Intro to Fiscal and Monetary Policies Unit IV: Finance and Banking and ...
Lecture34(Ch26)
... • The main reason that the MPC is uncertain is that consumers are forward looking – They tend to anticipate or at least plan for the future, rather than simply respond mechanically to current income ...
... • The main reason that the MPC is uncertain is that consumers are forward looking – They tend to anticipate or at least plan for the future, rather than simply respond mechanically to current income ...
Fiscal Policy & the Multiplier
... rise in transfer payments, real GDP may rise by either more or less than the initial government outlay—the multiplier may either be more or less than 1 Tax cut has a similar effect to the effect of a transfer Increases disposable income, leading to a series of increases in consumer ...
... rise in transfer payments, real GDP may rise by either more or less than the initial government outlay—the multiplier may either be more or less than 1 Tax cut has a similar effect to the effect of a transfer Increases disposable income, leading to a series of increases in consumer ...
Aggregate Demand, Supply and Fiscal Policy
... • Gov borrows in the “Loanable Funds” Mkt by selling gov’t bonds & other securities • This drives up the price of borrowing (i) making it more expensive for Ig to occur • Gov borrowing has “crowded out” business spending lowering GDP (output) in the long run (less capital stock = less future output) ...
... • Gov borrows in the “Loanable Funds” Mkt by selling gov’t bonds & other securities • This drives up the price of borrowing (i) making it more expensive for Ig to occur • Gov borrowing has “crowded out” business spending lowering GDP (output) in the long run (less capital stock = less future output) ...