Shifters
Personal income taxes are reduced significantly
What is consumer spending?
The 2 forms of expansionary fiscal policy
What is increase spending and decrease taxes?
Consumer spending increases
What is AD shifts right?
When the government increases spending without increasing taxes they will increase the annual deficit and the national debt. This is called?
What is deficit spending?
A change in which of the following will cause the AD curve to shift?
a-energy prices, b-productivity rates. c-consumer wealth, d- price of inputs, e-prices of consumer goods.
C - what is consumer wealth?
I am always given up in order to gain something else. What am I?
What is Opportunity Cost?
I have neither feet, nor wheels, nor wings, but I travel many miles to bring you cheer.
A Christmas card
Government spends $10 on defense spending
What is Government Spending?
What is the difference between discretionary and non-discretionary fiscal policy?
Discretionary is an action by government, where non-discretionary is already in place
Resource prices decrease, this happens to AD/AS
What is AS shifts right
The simultaneous occurrence of high rates of inflation and unemployment
What is stagflation?
What will an increase in capital stock do in the long run?
Shift LRAS to the RIGHT.
I can show various possible combinations of 2 goods that can be produced within a specified time with all its resources fully and efficiently employed. What am I?
Production Possibilities Curve
Why do snowmen make good detectives?
They are great at solving Cold Cases.
When the price of oil increases
What are resource prices?
This kind of fiscal policy would be used if the economy was in an inflationary gap
What is contractionary fiscal policy?
Draw a recessionary gap
equilibrium to the left of LRAS
Relationship between interest rates and shifts in AD
What is high interest rate decreases AD or low interest rate increases AD?
(i-rates especially affect the I component of AD)
If Charlie Brown's disposable income increases from $600 to $650 and her personal consumption expenditures increases from $480 to $520 her marginal propensity to save is?
What is .2?
40/50 = .8
MPC = .8
MPS 1-.8 = .2
Do you know about an economics student injured his neck by diving into a pool?
He didn't remember to seasonally adjust.
What do you give a snowman with ta fever?
A chill pill.
Inflation is expected to increase by 2%
What is inflationary expectations?
This occurs when a government increases spending in a recession
What is a deficit?
Inflationary Gap (draw the model)
equilibrium to the right of LRAS
The total available capital in a country. When businesses make investments in big assets it adds to this.
What is Capital Stock?
The SRAS curve slopes upward because
a-the wealth effect, b- sticky wages and prices,
c- the law of diminishing returns, d-the NRU
d-the multiplier
What are sticky wages and prices?
Why did the economics teacher stop telling jokes about economists?
There wasn't enough demand for them.
Why couldn't the teacher find anyone to help her with her gifts?
No one was present
The government simultaneously decreases spending and decreases taxes. What happens to PL and unemployment?
What is PL decrease and unemployment increase?
The economy is in a recessionary gap of $100 million. How much would the government have to change spending to return to equilibrium? MPC=.8
What is $20 million increase in spending?
(100mill = 5X
100/5 = 20)
In the short run when aggregate supply increases price level and unemployment will...
Price level decreases
Unemployment decreases
Non-discretionary Fiscal Policy is private spending or taxation laws enacted to work counter cyclically to stabilize the economy. Examples: Welfare, Unemployment, Income Tax
What are automatic stabilizers?
What's the difference between the Keynes (Fiscal Policy) and Classical models?
FISCAL/KEYNES - Prices and wages are sticky and the only way to get out of a recession is to increase AD and to get out of an inflation is to decrease AD. CLASSICAL - In the long run prices and wages are flexible therefore the economy will fix itself.
Have NO DOUBT....
GRAPH IT OUT
If otters keep their money in riverbanks, where does Frosty the Snowman keep his money?
He keeps his money in a snowbank.