Tucker Chapter 21

A budget where government revenue exceeds government expenditures

MPC + MPS= 1

Increase government spending, decrease taxes

tax cuts, more disposable income, people spend more, AD increases, economy expands, employment rises, inflation rises

What is expansionary fiscal policy used for?

unemployment compensation, Medicaid, veteran's benefits, and welfare are

A fiscal policy that emphasizes government policies that increase aggregate supply to achieve long-run growth

a graph that depicts the relationship between tax rates and total tax revenue

The change in consumption spending resulting from a given change in income

Use of government spending and taxes to influence the nation's output, employment, and price level

A budget where government expenditures exceed government revenues

tax cuts, more disposable income, firms invest, AS increases, economy expands, employment rises, inflation is reduced

the Laffer curve was developed by

The deliberate use of changes in government spending or taxes to alter aggregate demand and stabilize the economy

The change in saving resulting from a given change in income

Change in aggregate demand from initial change in any component of the GDP

Decrease government spending and increase taxes

Federal expenditures & tax revenues that automatically change levels to stabilize an economic expansion or contraction

To decrease aggregate demand in order to combat inflation