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!