ECON 131 ch. 13

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jo73
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289408
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ECON 131 ch. 13
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2014-11-16 20:52:39
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  1. Fiscal Policy
    The making of deliberate, discretionary changes in federal government expenditures or taxes to achieve certain national economic goals
  2. When the government spends more, the dollar value of total spending initially must rise
  3. Expansionary Fiscal Policy
    When Government spends more
  4. Expansionary Fiscal Policy leads to
    aggregate demand curve shifting to the right
  5. The spending decisions of firms, individuals, and other countries' residents depend on the taxes levied on them
  6. Increase in taxes leads to what concerning the Aggregate Demand
    reduction in AD (Leftward Shift)
  7. Crowding Out Effect
    a rise in government spending, holding taxes constant, tends to crowd out private spending, dampening the positive effect of increased government spending on aggregate demand
  8. Crowding out dilutes the effect of expansionary fiscal policy
  9. Ricardian Equivalence Theory
    • proposition that an increase in the gov budget deficit has no effect on aggregate demand
    • this is because people will save money for future taxes

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