Chapter 11 - Fiscal Policy, Deficits, and DebtBrief Outline
Fiscal Policy and the Multiplier Effect Show
FISCAL POLICY WE ALREADY KNOW: If there is UE? In this chapter we will look at how effective various fiscal policy tools are - or , put another way, we will the multiplier effect of various fiscal policy options. If a fiscal policy tool that has a larger multiplier effect is more effective at reducing unemployment or inflation. A tool that has a smaller multiplier effect is less effective. The table below outlines the various fiscal policy tools / multipliers.
The Government Spending Multiplier Now let's add government to our model. The Lump-Sum Tax Multiplier There are three fiscal policy tools: The Balanced Budget Multiplier There are three fiscal policy tools: Multiplier with Crowding Out The crowding-out effect may be caused by fiscal policy.a. REVIEW MULTIPLIERS Multiplier with Supply-Side Effects (pp. 2-2) A. What is "Supply-Side FP" ?1. The contention that tax reductions will also shift the aggregate supply curve to the right. The Multiplier with Changes in the Price Level We have been assuming that the price level does not change as AD increases (see graph). Built-in Stabilizers: Non-discretionary Fiscal Policy
The Standardized BudgetWhat happens to the government budget deficit if it uses expansionary FP? Problems, Criticisms, and Complications
The Public DebtThe national or public debt is the total accumulation of the Federal government's total deficits and surpluses that have occurred through time.The federal government's budget DEFICITS and SURPLUSES are ANNUAL differences between the revenue collected and government spending. When current tax revenues exceed government expenditures and the economy is achieving full employment?When current tax revenues exceed current government expenditures and the economy is achieving full employment: contractionary fiscal policy. Suppose the government purposely changes the economy's cyclically-adjusted budget from a deficit of 3 percent of real GDP to a surplus of 1 percent of real GDP.
What happens when government revenues exceed expenditures?The Government Budget Balance
occurs if government revenues exceed expenditures. A budget deficit. occurs if government expenditures exceed revenues. The minus sign is often omitted when reporting a deficit.
Which of the following represents a situation where tax revenues exceed government spending?In a government setting, a budget surplus occurs when tax revenues in a calendar year exceed government expenditures. The United States government has only achieved a budget surplus four times since 1970.
What is it called when the government spends more than it receives in taxes quizlet?A government budget deficit exists if the government spends more than it receives in taxes during a given period of time.
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