Stabilization Policies
The combination of contractionary fiscal policy and contractionary monetary policy will definitively cause this broad macroeconomic variable to decrease
What is the price level (or aggregate demand)?
Crowding out specifically reduces this component of aggregate demand
What is private (domestic) investment?
The total amount of goods and services produced by each worker in one hour
What is labor productivity?
A tax placed exclusively on imported goods
What is a tariff?
A significantly higher domestic inflation rate will cause the domestic currency to experience this in the FOREX market
What is depreciation?
If the central bank buys bonds while the government increases taxes, the effect on interest rates is definitively this
What is a decrease?
An increase in government deficit spending shifts this curve to the right in the loanable funds market
What is the demand for loanable funds?
Roads, bridges, ports, and power grids represent this type of capital, which is essential for economic growth
What is infrastructure?
A legal limit on the physical quantity of a specific good that can be imported
What is a quota?
If European tourists flock to the United States for summer vacations, the demand for the US dollar will move in this direction
What is increase?
The time it takes for policymakers to recognize an economic problem, formulate a plan, and implement it
What are policy lags (or inside/outside lags)?
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The discovery of a massive new natural gas reserve represents an increase in this factor of production
What is land (or natural resources)?
The primary domestic demographic group that directly benefits from the imposition of a protective tariff
What are domestic producers?
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The idea that expansionary fiscal policy might be offset by an appreciation of the currency and a decrease in net exports
What is the net export effect?
Because it reduces capital accumulation, long-run crowding out shifts this curve to the left or slows its rightward shift
What is the long-run aggregate supply curve (or production possibilities curve)?
Patents and copyrights are designed to promote economic growth by encouraging this specific type of advancement
What is technological progress (or innovation)?
The imposition of a tariff on an imported good results in a deadweight loss and a reduction of this specific type of economic surplus
What is consumer surplus?
If investors believe the Canadian dollar will appreciate in the future, their current demand for Canadian financial assets will do this
What is increase?
To reduce the national debt without causing a severe recession, a government might combine a tax increase with this specific central bank action
What is expansionary monetary policy (or buying bonds)?
Crowding out is less likely to occur during a severe recession because this type of business demand is already very low
What is investment demand?
A sustained increase in real GDP per capita over time is the strict definition of this macroeconomic goal
What is economic growth?
A direct financial payment made by a government to a domestic producer to help them compete against foreign imports
What is a subsidy?
When a country's currency depreciates, foreign buyers view its exported goods as this
What is cheaper (or relatively less expensive)?