Economics Chapter 15

What does an increase in aggregate demand cause?

What does a decrease in aggregate demand cause?

Consists of deliberate changes in government spending and tax collections designed to achieve full employment, control inflation, and encourage economic growth

An increase in government spending, a decrease in taxes, or some combination of the two for the purpose of increasing aggregate demand and output

What helps control demand-pull inflation?

A decrease in government spending, an increase in taxes, or some combination of the two for the purpose of decreasing aggregate demand and halting inflation

Anything that increases the government's budget deficit (or reduces its budget surplus) during a recession and increases it budget surplus (or reduces its budget deficit) during expansion without requiring explicit action by policymakers

When the economy is moving towards inflation, what type of spending is desirable?

When the economy is slumping, what type of spending is desirable?

A measure of what the Federal budget deficit or surplus would be with existing tax rates and government spending programs if the economy had achieved its full employment GDP in that year

The time between the beginning of recession or inflation and the certain awareness that it is actually happening?

The time between the need for fiscal policy is recognized and the time action is taken

The time between when the fiscal action is taken and the time that action affects output, employment, or price level

A decrease in private investment caused by higher interest rates that result from the government's increased borrowing to finance deficits

When is it ideal for countercyclical fiscal policy to be used?