ECON 1102 Lecture Notes - Lecture 13: Deficit Spending, Fiscal Policy, Aggregate Demand
Document Summary
Scal policy is trying to move us to non inf output. Y decreases so tax colection decreases, t decreases, so income falls and taxes fall somewhat so change in. Di falls by less to = a stabilizing force. Chapter 13: fiscal policy, deficits, surpluses, and debt. Fiscal policy refers changes in government spending and tax collections designed to achieve a full-employment and non-inflationary domestic output. what itcan prod with is resources sustainably. Policy changes are called active or discretionary if they are at the option of the government, and are called passive, automatic, or non-discretionary if they are independent of the government. Fiscal policy is typically used in a counter-cyclical way: expansionary fiscal policy when the economy is in recession, contractionary fiscal policy when the economy is in expansion. Expansionary fiscal policy, used to reduce the effects of a recession, can mean increased government spending, tax reductions, or a combination of both.
