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Flashcards in Chapter 11 Deck (14):
1

Expansionary policy : ___________ government policy or _____________ taxes

Increase govt spending
Decrease taxes

2

Type of policy in an inflationary gap?

Contractionary policy

3

Contractionary policy: ___________ government spending, ____________ taxes

Decrease govt spending
Increase taxes

4

Crowding out effect

Govt wants you to spend

5

Complete crowding out

Saving all of your extra money (totally ineffective)

6

Type of policy in a recessionary gap?

Expansionary policy

7

Budget deficit

Govt > tax revenue

8

Budget surplus

Tax revenue > govt spending

9

Fiscal policy

Changes in govt expenditures or taxes to achieve economic growth

10

Marginal tax rate

Change in tax payment / change in taxable income

11

Zero crowding out

Effective

12

Zero crowding out : private sector receives more money today bc

Of the reduction in taxes and they won't save this extra money

13

Complete crowding out

Totally ineffective
(Expansionary fiscal policy)

14

If govt increases tax rate, tax revenue

Decreases