fiscal policy

Question 1

fiscal policy

Answer 1

deliberate actions of the fed gov to bring about economic stability through the use of taxes and gov spending

Question 2

in a recession we have a ______ policy

Answer 2

expansionary

Question 3

during a recession taxes_____, gov spending______, and we have a budget ______

Answer 3

down, up, deficit

Question 4

during inflation we have ______ policy

Answer 4

contractionary

Question 5

during inflation taxes ______, gov spending _____, and we have a budget _____

Answer 5

up, down, surplus

Question 6

tax multiplier formula

Answer 6

-mpc/mps

Question 7

spending multiplier

Answer 7

1/mps

Question 8

3 problems with fiscal policy

Answer 8

recognition lag
administration lag
operational lag

Question 9

what two things have happened by the time congress acts

Answer 9

problem has corrected itself or its too late

Question 10

automatic stabilizer

Answer 10

policies designed to offset fluctuation in economy without gov intervention

Question 11

what are some examples of automatic stabilizers

Answer 11

social security
unemployment compensation
workers compensation

Question 12

political business cycle

Answer 12

resulting from manipulation of policy tools by incumbent politicians hoping to stimulate economy prior to election

Question 13

crowding out effect

Answer 13

when gov borrows causing increase in real interest rate and a decrease in investment spending in the economy

Question 14

phillips curve

Answer 14

gives us trade off in the short run between inflation and unemployment (in long run its natural rate of unemployment)

Question 15

LRPC and LRAS move in ____ directions

Answer 15

opposite

Question 16

SRPC and SRAS move in _____ directions

Answer 16

opposite

Question 17

rightward shift in short run phillips curve is caused by a ______ supply shock

Answer 17

negative

Question 18

leftward shift in short run phillips curve is caused by a ______ supply shock

Answer 18

positive