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Econ 3rd exam
Terms in this set (19)
spending for consumer goods and services in excess of disposable income; the amount by which personal consumption expenditures exceed disposable income
A schedule showing the amounts households plan to spend for consumer goods at different levels of disposable income
Factors that would Increase investment demand
Any factor that leads businesses collectively to expect greater rates of return on their investments
Factors that would decrease investment demand
Any factor that leads businesses collectively to expect lower rates of return on their investment
increase GDP by increasing expenditures
reduce aggregate expenditures and GDP
"Savings" withdrawal of spending from the economies circular flow of income and expenditures
"Investment" the purchase of capital goods
What is the relationship of actual and full-employment GDP if there is a recessionary of inflationary gap
When GDP is less than expenditures
Real balance effect
the tendency for increases in the price level to lower the real value (or purchasing power) of financial assets with fixed money value and as a result to reduce total spending and real output and conversely for decreases in the price level.
changes in consumer spending, changes in investment spending, changes in government spending, changes in net export spending
changes in input prices, changes in productivity, change in legal-institutional environment
changes in government spending and tax collections designed to achieve a full-employment and non inflationary domestic output; also called discretional fiscal policy
a decrease in government purchases of goods and services, an increase in net taxes, or some combination of the two, for the purpose of decreasing aggregate demand and thus controlling inflation.
a increase in government purchases of good and services, a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate demand and expanding real output.
expansionary ways to finance a deficit
borrow money, create money
built in stabilizers
anything that increases the governments budget deficit during a recession and increases its budget surplus during an expansion without requiring explicit action by policy makers
Crowding out effect
a rise in interest rates and resulting decrease in planned investment caused by the federal governments increased borrowing to finance budget deficits and refinance debt
aim of supply side policy
improve the productive capacity of the economy. Government attempts to increase productivity and shift aggregate supply to the right.
THIS SET IS OFTEN IN FOLDERS WITH...
Ch.27 Macroeconomic Models and Fiscal Policy
Macroeconomic Chapter 9
ECO 201 CH 27
Economics Chapter 10
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