Sides Game Contractionary Fiscal Policy should only be implemented when the SR macroeconomic equilibrium is to which side of LRAS Keynes argued that fiscal policy should be used to influence AD or AS Revenue > Expenditure Sum of all deficits (+) and surplus (-) = Stabilization policies are used to encourage sustainable growth while maintaining the delicate balance between _____ and ______ Give an example of discretionary fiscal policy Revenue = Expenditure Ratio used to compare the scale of countries (with different size economies) debt problem Give an example of an automatic stabilizer Expansionary Fiscal Policy should only be implemented when the SR macroeconomic equilibrium is to which side of LRAS Most intragovernment (interdepartmental) debt is held in this programs trust fund Deficit that grows during a recessionary gap and goes negative during expansionary gap • Which lag is identical in monetary and fiscal policy? List the 3 tools of the Fed • Which two lags are MUCH longer in fiscal policy? • According to the Ricardo-Barro theory, increased government deficit spending leads to – More or less spending by consumers and businesses Which is the main tool of monetary policy? Which rate is targeted by OMO? Which combination will definitely increase AD? • Discount Rate • Government Spending • Open Market Operations • When further increases in the money supply do not decrease interest rates, the economy has fallen into a __________ trap The Phillips Curve looks at the relationship between Which combination will definitely reduce the inflation rate? • Discount Rate • Government Spending • Open Market Operations The crowding out effect will increase if the Fed employs which OMO? When the Fed sells bonds, what happens to • • • • Interest rates Investment RGDP PL Revenue < Expenditure The LRPC looks just like which curve from the AD/AS model? Critics refer to supply side economics as Which curve shows that lower tax rates may produce more government revenue? GAME OVER! Final Note • Bond buying counteracts crowding out!