AP Econ Section 4: Module 20 - 21 - Key Terms Quiz

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stabilization policy
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Terms in this set (9)
stabilization policy
the use of government policy to reduce the severity of recessions and rein in excessively strong expansions.
social insurance
government programs intended to protect families against economic hardship.
expansionary fiscal policy
fiscal policy that increases aggregate demand.
contractionary fiscal policy
fiscal policy that reduces aggregate demand.
tax multiplier
the factor by which a change in tax collections changes real GDP.
balanced budget multiplier
the factor by which a change in both spending and taxes changes real GDP.
lump-sum tax
a tax of a fixed amount paid by all taxpayers, independent of the taxpayer's income.
automatic stabilizers
government spending and taxation rules that cause fiscal policy to be automatically expansionary when the economy contracts and automatically contractionary when the economy expands.
discretionary fiscal policy
fiscal policy that is the result of deliberate actions by policy makers rather than rules.