Chapter 11: Fiscal Policy, Surpluses and Debt

Card Set Information

Author:
Anonymous
ID:
145234
Filename:
Chapter 11: Fiscal Policy, Surpluses and Debt
Updated:
2012-04-02 10:52:14
Tags:
Fiscal Policy Surpluses Debt
Folders:

Description:
Chapter 11: Fiscal Policy, Surpluses and Debt
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user Anonymous on FreezingBlue Flashcards. What would you like to do?


  1. Define FISCAL POLICY
    Government adjusting spending and taxes in order to increase or decrease aggregate demand.
  2. Define DISCRETIONARY FISCAL POLICY
    The government DELIBERATELY changing spending and taxes to promote full employment, price stability and economic growth
  3. Define EXPANSIONARY FISCAL POLICY
    • Increase in goverment spending & decrease in taxes ---> increase aggregate demand
    • (shift aggregate demand curve to the right)
  4. Define CONTRACTIONARY FISCAL POLICY
    • Decrease in government spending & increase in taxes ---> decrease aggregate demand
    • (shift aggregate demand curve to the left)
  5. Define BUDGET DEFECIT
    • The amount by which government expenditures exceed revenues/tax
    • G > T
  6. Define BUDGET SURPLUS
    • The amount by which revenues exceed expenditures
    • G < T
  7. Define Built-In Stabilizer
    • Results from net taxes
    • Lessens, but does not fully correct, undesired changes in GDP
  8. Define and explain CYCLICALLY ADJUSTED BUDGET
    • Measures the federal budget defecit or surplus that would occur if the government were to operate at full employment
    • Reveals whether fiscal policy is expansionary, neutral or contractionary
    • (Fiscal policy is expansionary when CAB is positive)
  9. Define CROWDING OUT EFFECT (a problem with fiscal policy)
    Expansionary fiscal policy may increase interest rate and reduce investment spending
  10. Define Public Debt
    The total accumulation of the government's defecits (minus surpluses) over time

What would you like to do?

Home > Flashcards > Print Preview