Final Flashcards
(5 cards)
1
Q
Fiscal Policy vs Monetary Policy
A
Fiscal Policy - Changes in government spending, or taxes, to stimulate or slow down the economy (218)
Monetary Policy - influencing economy through changes in banking system’s reserves to influence money supply and credit availability (290)
2
Q
Expansionary Fiscal Policy
A
Increase deficit => decrease taxes, increase government spending
Shift’s AD curve to right
3
Q
Contractionary Fiscal Policy
A
Decrease deficit => increase taxes, decrease government spending
Shift’s AD curve to left
4
Q
simple money multiplier
A
(268) how much money is created from deposits
1/r
ie, 1/.2 = 5
5
Q
discount rate
A
rate of interest Fed charges for loans to banks