Microeconomics Ch 34

Keynes's theory that the interest rate adjusts to bring money supply and money demand into balance.

The setting of the level of government spending and taxation by government policymakers

The additional shifts in aggregate demand that result when expansionary fiscal policy increases income and therby increases consumer spending.

The offset in aggregate demand that results when expansionary fiscal policy raises the interest rate and thereby reduces investment spending

Changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policymakers having to take any deliberate action.