Expansionary fisical policy-raising government spending or lowering taxes or both , can be used to shift the AD curve to the right.
The difference between the amount of money a government spends and the amount it recieves in taxes over a given period of time.
Gov't debt held by individuals and institutions outside of the gov't.
A fall in the overall price level.
Level of real GDP that the economy would produce once all prices had fully adjusted.
Change in the Money Supply will have little effect on Ir because demand curve is flat.
If the demand curve is flat then a _____ _____ exists.
A reduction in the value of the money held by the public, by printing money to cover its budget deficit and creating inflation
Printing money to cover a budget deficit leads to inflation.
"Supply creates its own demand"
Down
Believe that the demand for money is very sensitive to IR.
Contractionary fisical policy - lowering government spending or increasing taxes, or both- can be used to shift the AD curve to the left.
A sum of money a government owes at a particular point in time.
Describes how prices and unemployment are related when AS is unchanged.
The process of bringing down inflation that has become embedded in expectations.
The difference between the government tax revenue and its spending, on goods and services and on gov't transfers in a given year.
The FED lowers the discount rate. This policy is designed to increase Ad in order to fight _____.
Percentage difference between the actual level of real GDP and potential output
If AD doesn't change, the higher AS curve will result in higher prices , lower output , and more unemployment
A rise in the overall level prices.
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