FISCAL POLICY
Fiscal policy like higher spending and tax cuts, that encourage economic growth.
expansionary policies
Low interest rates will ______ investment and consumption.
Increase
How will deregulation help achieve supply-side objectives?
Allows new firms to enter the market. Stimulates competition
A general tax levied on most consumer purchases
sales tax
A way of encouraging economic growth
cutting taxes or increasing government spending
Creating too much money can lead to
Inflation
Deregulation is the...
removal of rules and regulations
A tax that imposes a higher percentage rate of taxation on people with higher income
progressive tax
An increase in demand will lead to
lower unemployment
Define Reserve Ratio
The % of deposits that banks keep in liquid reserves
The curve that supply-side policy seeks to shift
the long-run aggregate supply curve
A tax placed on the value that manufacturers add at each stage of production
value-added tax (VAT)
Contractionary fiscal policies try to decrease...
aggregate demand
Monetary Policy is the management of
money supply and interest rates
Define supply-side policies
Government measures designed to increase aggregate supply in the economy
An increase in taxes or a decrease in government spending may cause this
a recession
Define Money Multiplier
The amount that commercial banks can increase the supply of money in an economy
Three interventionist supply-side growth policies
government investment in education, R&D, and infrastructure