• Econ 201 Study Guide O'Dea
    deliberate actions by policy makers, rather than rules. More controversial than automatic stabilizers. Cyclically adjusted budget balance: An estimate of what the budget balance would be if Real GDP were exactly equal to potential output. Fiscal year: Oct 1 – Sept 30th, labeled in the year in which...
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  • Microeconomics
    fixed by policy (Chapter 16), so AD is downward sloping because of the way C, I, and NX respond to changes in the price level. 1. The wealth effect explains how a change in the price level affects consumption (C). A household’s wealth is the difference between the value of its assets and the value...
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  • Islm
    , which in turn lowers Y . • Once again, we can better understand the economic impact of expansionary monetary policy by looking at what happens to the various components of the IS curve and the LM curve. You should try and figure out the corresponding impact of a contractionary monetary policy...
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  • macroeconomics
    - Chapter 13 Learning Objectives: 1.  Define the multiplier effect and use it to calculate changes in equilibrium GDP. 2.  Define fiscal policy. 3.  Explain how fiscal policy affects AD and how the government can use fiscal policy to stabilise the economy. 4.  Explain how the multiplier process...
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  • Gov Stuff
    , reducing taxes on small businesses, and offering more student loans----is an example of fiscal policy. FLAVORS OF FISCAL POLICY Contractionary Expansionary Contractionary fiscal policy aims to decrease aggregate demand to curb inflation. Methods include increasing taxes and decreasing...
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  • Economincs
    fiscal policy: expansionary and contractionary. Expansionary fiscal policy, designed to stimulate the economy, is most often used during a recession, times of high unemployment or other low periods of the business cycle. It entails the government spending more money, lowering taxes, or both. The goal...
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  • Monetary Policies
    fiscal policy may be more suited to fighting unemployment, while monetary policy may be more effective in fighting inflation. There is a limit to how much monetary policy can do to help the economy during a period of severe economic decline, such as the United States encountered during the 1930s. The...
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  • Macroeconomics Exam
    ’ (or discretionary) fiscal policy? 8. Explain, both in words and by using the AD/AS-model, how an expansionary fiscal policy would affect the Chinese economy. (Show which curve(s) in the AD/AS-model shift and in what direction and explain in words the main expected results of such a policy on...
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  • Economic Growth
    , generating higher inflation and interest rates. In the brief lag between the boost in spending and the higher inflation, output might be temporarily boosted, but the economy cannot function for long above full capacity. Monetary or Fiscal Policy? Monetary policy plays the primary role in economic...
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  • Monetary Policy
    the world. This project seeks to answer the questions “What are the effects of monetary policy on stock market performance?”; “How do shocks in the growth rate of market capitalization, money supply growth, lending rate and inflation rate affect the performance of stock markets in both developing...
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  • Macroeconomics
    . Recessionary Gap & External Deficit: Deficit: Expansionary fiscal/monetary policy (expenditure increasing) cures recessionary gap but worsens external deficit because of increased imports Contractionary policy (expenditure reducing) cures external deficit but worsens the recession A policy dilemma! What...
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  • Eco202 Module 1
    Friedman approach the economy. What are their key differences and similarities? One source of contradiction between the ideas of Keynes and Friedman is in the role of the government. Keynes is concerned with full employment which basically increased the importance of policies and intervention...
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  • keynesian economics
    of the labour force. John Maynard Keynes who was once a student of Alfred Marshall introduced what he thought would completely solve the unemployment problem which is called the Keynesian unemployment, from the 1930’s to 1970’s government tended to follow the Keynesian policy on how to control the...
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  • Macro Tut 6
    Discuss how the government can use discretionary fiscal policy and automatic stabilisers to stabilise fluctuations in real GDP. What tools does the government have at its discretion to stabilise the economy? Suppose the government decides to decrease income taxes. Show in a diagram and explain how...
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  • Maroeconomices
    policy. c. Contractionary fiscal policy and expansionary monetary policy. d. Contractionary fiscal policy and contractionary monetary policy. ANSWER: A 31. According to the assignment rule, which of the following policy mixes is appropriate for a country with high inflation, a balance of payments...
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  • Europe: Economic Policy & Structural Change
    ECON3018: Block 4 E4.1 Explain concisely what a fiscal consolidation is and why it might be either contractionary or expansionary. Provide an evaluation of episodes of fiscal consolidation in European countries since the 1980s – were they contractionary or expansionary and why? Explain what is...
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  • Fiskal - Changing Impact of Fiscal Policy on Selected Asean
    current output is zero. There is another literature that posits the multiplier can in fact be negative, what is known as the non-Keynesian or expansionary fiscal contraction (or conversely, contractionary fiscal expansion) effect.4 Theories that explain this phenomenon appear to have followed the...
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  • Monetary and Fiscal Policies Coordination: Pakistan's Experience
    fiscal policies have been executed independently throughout the study period that is 1964-65 to 2008-09 and there have been very few instances of coordination between the two policies while addressing prevailing economic conditions. The paper does not find any difference between the behavior of...
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  • Notes
    pressure on prices in the economy. Government’s role in managing the economy: using monetary and fiscal policy to influence level of spending in economy. Expansionary :simulate spending Contractionary: dampen economy Monetary policy: use of the banking system to alter the money supply and bank...
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  • Macro Summary Notes
    fiscal policy may be difficult to change quickly, it is still useful for dealing with prolonged episodes of recession. 4. How does fiscal policy impact on the distribution of income? • Fiscal policy affects the distribution of income in the economy since taxes and transfers shift income between...
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