ECN 204 Lecture Notes - Lecture 7: Id2, National Debt Of The United States, Money Supply

• School: Ryerson University
• Department: Economics
• Course: ECN 204
• Professor: Zohra Jamasi

Document Summary

Model: i(cid:374)(cid:272)e 19(cid:1008)(cid:1009), fis(cid:272)al poli(cid:272)(cid:455) has (cid:271)ee(cid:374) o(cid:374)e of the go(cid:448)er(cid:374)(cid:373)e(cid:374)t"s main stabilization policy tools, (cid:862)active(cid:863) if (cid:272)ha(cid:374)ges i(cid:374) go(cid:448)er(cid:374)(cid:373)e(cid:374)t spe(cid:374)di(cid:374)g or ta(cid:454)es are at the option of the government, (cid:862)non-discretionary(cid:863) if i(cid:374)depe(cid:374)de(cid:374)t of parlia(cid:373)e(cid:374)tar(cid:455) a(cid:272)tio(cid:374) Model: expansionary fiscal policy, used when recession occurs, options, increased government spending, tax reductions, combined government spending increases and tax reductions. billion increase in spending l e v e l e c i r. Model: contractionary fiscal policy, used to combat demand-pull inflation, options, decreased government spending, increased taxes, combined government spending decreases and tax. 13. 2 built-in stability: net tax revenues vary directly with gdp, taxes rise when gdp rises, and vice versa, transfer payments fall when gdp rises, and vice versa, leads to automatic stabilization over the business cycle. Automatic or built-in stabilizers: a structure of taxation and spending that, increases the deficit (reduces the surplus) during recession, increases the surplus (reduces the deficit) during inflation.