Fiscal & Monetary Policy
This is the main goal of fiscal and monetary policy.
What is closing output gaps?
This describes the relationship between inflation and unemployment in the short run.
What is inverse (negative relationship)?
This is what happens to real GDP in the long run according to monetary neutrality.
What is it remains constant?
This occurs when government spending exceeds tax revenue.
What is a budget deficit?
This occurs when government borrowing reduces private investment.
What is crowding out?
This happens to AD during expansionary fiscal policy.
What is it increases (shifts right)?
This is the shape of the long-run Phillips Curve.
What is vertical?
This equation represents the quantity theory of money.
What is MV = PY?
This is the formula used to calculate the government’s budget balance.
What is T − (G + TR)?
This happens to interest rates when the government borrows more.
What is they increase?
This happens to interest rates during expansionary monetary policy.
What is they decrease?
These cause movements along the short-run Phillips Curve.
What are changes in AD?
This happens to the price level if the money supply increases by 10% in the long run.
What is it increases by about 10%?
This is the budget balance when T=10000, G=7500, TR=500.
What is 2000?
This is the main driver of long-run economic growth.
What is productivity?
This happens to AD and output when the Fed raises interest rates.
What is AD decreases and output decreases?
These cause shifts of the short-run Phillips Curve.
What are supply shocks or changes in expected inflation?
These are the types of variables affected by money supply in the long run.
What are nominal variables?
This is the accumulation of past deficits minus surpluses.
What is government (national) debt?
This rule estimates how long it takes for something to double.
What is the Rule of 70?
This policy increases government borrowing in the loanable funds market.
What is expansionary fiscal policy?
This movement happens on the SRPC when AD increases.
What is a leftward movement?
This is why SRAS shifts left after AD increases.
What is higher wages increase production costs?
This happens to the budget balance during expansionary fiscal policy.
What is it decreases?
This is one government policy that can increase long-run economic growth.
What is investing in education, infrastructure, or technology?