Fiscal Policy And The Public Debt

Front 1

Discretionary fiscal policy is

Back 1

the deliebrate manipulation of taxes and spending by governemtn for the purpose of altering real GDP and employment, controlling inflation and stimulating economic growth

Front 2

Expansionary fiscal policy is

Back 2

an increase in government spending and/or lowering taxes as it aims to stimulate economic activity and to move the economy out of recession

Front 3

Contractionary fiscal policy is

Back 3

decreased government spending and/or implementing higher taxes

Front 4

Debt reduction is

Back 4

the reduction of interest rates which stimulates private spending

Front 5

Idle surplus (impounding)

Back 5

is the government withholding purchasing power

Front 6

Non-discretionary fiscal policy are

Back 6

built-in stabilisers that operate without requiring explicit action by policy makers

Front 7

Crowding-out effect is

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when an expansionary fiscal policy tends to increase the interest rate, thus reducing interest-sensitive private spending, especially investment, thereby weakening or cancelling the stimulatory effects of fiscal policy

Front 8

Public debt is

Back 8

the total accumulation of the federal government's total deficits and surpluses over time

Front 9

Net export effect is

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the impact of interest-rate-induced change in the exchange rate.

Front 10

Expansionary fiscal policy example:

Back 10

Higher interest rates -> increased demand of $A -> Appreciation of $A -> Decline in net exports

Front 11

Contractionary fiscal policy example:

Back 11

Lower interest rates -> decreased demand of $A -> Depreciation of $A -> Increase in Net Exports