Week 15 content

Question 1

What is a fiscal policy?

Answer 1

The use of GS or tax to manipulate the level of AD in an economy and improve macroeconomic performance

Question 2

What is a budget statement?

Answer 2

Reveals any surpluses or defects from transactions of the public sector

Question 3

GS>T

Answer 3

Defecit

Question 4

GS

Answer 4

Surplus

Question 5

What is an automatic stabiliser?

Answer 5

Changes in fiscal policy that adjust economic fluctuations within a cycle without deliberate action

Question 6

Formula for total amount of tax

Answer 6

T = t (tax rate)Y(national income)

Question 7

2nd formula for amount of tax

Answer 7

T = tYpot(potential output)

Question 8

Formula for budget deficit

Answer 8

G - tYpot

Question 9

What is national debt?

Answer 9

Past deficits - past surpluses + debt interest

Question 10

In the short run, does GE vary with Y?

Answer 10

No

Question 11

Formula for equilibrium condition

Answer 11

Injections + G = Savings + T

Question 12

Gov Multiplier formulas (2)

Answer 12

1/(1-MPC(1-t)) or -b/(1-b) b=MPC

Question 13

When taxes change, does ti impact AE? But

Answer 13

No but it indirectly impacts AE via consumption

Question 14

What does the balanced budget multiplier equal?

Answer 14

GE multiplier + Tax multiplier

Question 15

Formula for Net Exports

Answer 15

X - Z

Question 16

What are the autonomous components of AE?

Answer 16

I, G, X

Question 17

What are the induced components of AE?

Answer 17

C, Z

Question 18

What does AE show a relationship between?

Answer 18

Between different expenditure components and domestic output

Question 19

Open Economy multiplier formula

Answer 19

1/(1-(MPC^1 - MPZ)

Question 20

Formula for MPC^1

Answer 20

MPC(1-t)

Question 21

n/a

Answer 21

n/a