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20 Cards in this Set

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What may be in order when a recession occurs?
Discretionary Fiscal Policy; either:
Expansionary or Contrationary
3 term phrase;

a description of the 2 types of active forms
What fiscal policy is described to be ACTIVE?
Discretionary
What fiscal policy is described to be PASSIVE?
Non-Discretionary
What 3 things can the government do to stimulate the economy?
[1] Increase/ Gvrnmt spending.
[2] Reduce taxes.
[3] Use some combination of the 1 & 2.
Deficit is high,
you pay this in april
1+2=1&2
Economists use the ______ budget to adjust the actual Federal Budget deficits and surpluses to eliminate the automatic changes in tax revenues.
Full-Employment Budget
Half?
How is the Full-Employment budget used?
To figure tax rates and gvnmt spending HAD it achieved full employment
rates? spending?
What are the 3 "Problems of Timing", experienced with fiscal policy?
[1] Recognition lag
[2] Administrative lag
[3] Operational lag
Lag
What is Recognition lag as it relates to fiscal policy?
A delay in awareness that the beginning of a recession or inlfation is going to occur.
Delay
What is Administrative lag as it relates to fiscal policy?
The delay in recognizing and the time needed to create a fiscal policy by the govnmt.
Delay...needed
What is Operational lag as it relates to fiscal policy?
The time it takes when the actual action is taken and that action effects output, employment, or price level.
Act, realization
Problems of timing, Political Considerations, and Future Policy Reversals are examples of?
Criticisms of Fiscal Policy
...Policy
Offsetting State and Local Finance, and the Crowding-out Effect are examples of?
Criticisms of Fiscal Policy
...Policy
Shocks originating from abroad and Net Export Effect are examples of?
Criticisms of Fiscal Policy
...Policy
Political considerations as a criticism of fiscal policy infers?
That politicians may use tactics that are effective in a short duration, but economically inappropriate.
A strong economy needed at election time...?
Future policy reversals as a criticism of fiscal policy infers?
Fiscal policy may fail if households expect future reversals of policy.
Tax increase? Tax decrease? Who knows?
Offsetting State and Local Finance as a criticism of fiscal policy infers?
These fiscal policies often worsen rather than correct recession or inflation.
These policies incorporate requirements to balance their budgets
Policies from abroad which can effect the economy is known as...
Shocks originating from abroad
Monetary agents keep the supply of money constant, but the gvnmt engages in expansionary policy thereby borrowing more money... is known as what effect?
Crowding-Out Effect
If the gvnmt uses expansionary policy, and increase interest rates, exports declines as known as...
Net export effect
What is Net export effect?
The gvnmt uses expansionary policy, and increase interest rates, exports declines.