MCC Economics Cure Chpt.12
Terms
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- What may be in order when a recession occurs?
-
Discretionary Fiscal Policy; either:
Expansionary or Contrationary - What fiscal policy is described to be ACTIVE?
- Discretionary
- What fiscal policy is described to be PASSIVE?
- Non-Discretionary
- What 3 things can the government do to stimulate the economy?
-
[1] Increase/ Gvrnmt spending.
[2] Reduce taxes.
[3] Use some combination of the 1 & 2. - Economists use the ______ budget to adjust the actual Federal Budget deficits and surpluses to eliminate the automatic changes in tax revenues.
- Full-Employment Budget
- How is the Full-Employment budget used?
- To figure tax rates and gvnmt spending HAD it achieved full employment
- What are the 3 "Problems of Timing", experienced with fiscal policy?
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[1] Recognition lag
[2] Administrative lag
[3] Operational lag - What is Recognition lag as it relates to fiscal policy?
- A delay in awareness that the beginning of a recession or inlfation is going to occur.
- What is Administrative lag as it relates to fiscal policy?
- The delay in recognizing and the time needed to create a fiscal policy by the govnmt.
- What is Operational lag as it relates to fiscal policy?
- The time it takes when the actual action is taken and that action effects output, employment, or price level.
- Problems of timing, Political Considerations, and Future Policy Reversals are examples of?
- Criticisms of Fiscal Policy
- Offsetting State and Local Finance, and the Crowding-out Effect are examples of?
- Criticisms of Fiscal Policy
- Shocks originating from abroad and Net Export Effect are examples of?
- Criticisms of Fiscal Policy
- Political considerations as a criticism of fiscal policy infers?
- That politicians may use tactics that are effective in a short duration, but economically inappropriate.
- Future policy reversals as a criticism of fiscal policy infers?
- Fiscal policy may fail if households expect future reversals of policy.
- Offsetting State and Local Finance as a criticism of fiscal policy infers?
- These fiscal policies often worsen rather than correct recession or inflation.
- Policies from abroad which can effect the economy is known as...
- Shocks originating from abroad
- Monetary agents keep the supply of money constant, but the gvnmt engages in expansionary policy thereby borrowing more money... is known as what effect?
- Crowding-Out Effect
- If the gvnmt uses expansionary policy, and increase interest rates, exports declines as known as...
- Net export effect
- What is Net export effect?
- The gvnmt uses expansionary policy, and increase interest rates, exports declines.