Chapter 34: The Influence Of Monetary And Fiscal Policy On Aggregate Demand Flashcards
1
Q
Fiscal policy
A
The setting of the level of government spending and taxation by government polcymakers
2
Q
Crowding out effect
A
The offset in aggregate demand that results when expansionary fiscal policy raises the interest rate and thereby reduces investment spending
3
Q
Automatic stabilizers
A
Changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policy makers having to take any deliberate action
4
Q
Theory of liquidity preference
A
Keynes theory that the interest rates adjusts to bring money supply and money demand into balance
