ECON 102 Lecture Notes - Lecture 11: Social Security Trust Fund, Money Supply, Fiscal Multiplier

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beigeant775

1 Apr 2020

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Fiscal policy= government spending, taxing and debt policies. Monetary policy= the behavior of the federal reserve concerning the nation"s money supply, interest rates, and credit conditions. G= federal government expeditures in a year (direct government expenditures) T= federal government revenue in a year (net taxes) When g>t the government has run a budget deficit. When t>g the government has run a budget surplus. Discretionary fiscal policy= changes in taxes or spending that are a result of deliberate changes in government policy. If congress and presidents decide to cut tax rates for example. Non discretionary fiscal policy= changes in taxes or spending that are a result of the interaction of established government policy and the state of the economy. Your taxes are a function of your tax rate, so if i make more money i pay more (dependent of a number of factors)

Related Questions

Answer the following policy questions using the short-run model on asset and output market equilibrium (AA and DD schedules). Be sure to label your graphs and explain them in words as well.

(a) What if Congress passes an amendment requiring the Federal government to keep a balanced budget? In our model, G = T, at all times. Can fiscal policy still affect employment and output?

(b) Would a temporary increase in government spending cause the current account to fall by more or less than a permanent increase?

(c) Assume the Federal government initially has a balanced budget. A cut to taxes without a corresponding spending cut will create a budget deficit. What if the deficit is financed by printing new money? Would that cause the currency to appreciate?

aquamarinecheetah94

Which of the following statement(s) about fiscal policy is/are true?

		A fiscal policy action to close a recessionary gap is to decrease taxes
		Fiscal policy may require time before it takes effect (lags)
		Expansionary fiscal policy can be achieved by increases in transfer payments and decreasing government purchases to pay for it.
		One potential problem with using fiscal policy to close recessionary output gaps is that sustained government deficits can be harmful to long-run economic growth.
		Fiscal policy may affect potential output as well as potential spending.
		The choices of government spending have little effect on fiscal policy since government spending is tied directly to the business cycle through Y=C+I+G+NX.
		A fiscal policy action to close an expansionary gap is to decrease government purchases
		Balanced budget fiscal policy is more effective than borrowing or re-paying government debt.

ceruleanmuskrat915

1. Discretionary fiscal policy refers to:

A. Any change in government spending or taxes that destabilizes the economy.

B. The authority that the President has to change personal income tax rates.

C. Intentional changes in taxes and government expenditures made by Congress to stabilize the economy.

D. The changes in taxes and transfers that occur as GDP changes.

2. Countercyclical discretionary fiscal policy calls for:

A. Surpluses during recessions and deficits during periods of demand-pull inflation.

B. Deficits during recessions and surpluses during periods of demand-pull inflation.

C. Surpluses during both recessions and periods of demand-pull inflation.

D. Deficits during both recessions and periods of demand-pull inflation.

3. Contractionary fiscal policy is so named because of it:

A. Involves a contraction of the nation's money supply.

B. Necessarily reduces the size of government.

C. Is aimed at reducing aggregate demand and thus achieving price stability.

D. Is expressly designed to expand real GDP.

brownsea-lion330

ECON 102 Lecture Notes - Lecture 11: Social Security Trust Fund, Money Supply, Fiscal Multiplier

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