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decrease in aggregate demand
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Why is it difficult for the federal government to increase or decrease spending?
Because two thirds of all government spending is on entitlements which the government connot easily alter. (by Solomon Zelman)
When would the government most likely decrease its spending?
. When unemployment has decreased
When would an increase in government purchases be an appropriate countercyclical fiscal policy?
A decrease in government spending and increase in taxes.
An example of contractionary fiscal policy would be?
A decrease in government spending and increase in taxes
A decrease in federal defense spending in the US is likely to cause?
layoffs at a large defense contracting company
Why is it difficult for the federal government to increase or decrease spending?
Because two thirds of all government spending is on entitlements which the government connot easily alter. (by Solomon Zelman)
When would the government most likely decrease its spending?
. When unemployment has decreased
What did not contribute to the federal budget surplus in the 1990s?
a decrease in government spending
When would an increase in government purchases be an appropriate countercyclical fiscal policy?
A decrease in government spending and increase in taxes.
An example of contractionary fiscal policy would be?
A decrease in government spending and increase in taxes
Do Keynesian economist believe that the economy is self regulating?
No, they regulate the economy by doing 2 things: 1)increasing government spending and decrease taxes to fight recession 2) decrease government spending and increase taxes to fight inflation.
What are the two ways the federal government could respond to an increase in the economy?
raise income taxes and decrease government spending
How is fiscal policy controlled?
Taxes, and government spending. Increasing taxes will decrease consumption and supply. Lowering taxes will increase consumption and supply. Increasing government spending will increase national consumption, and decreasing government spending will decrease national consumption. The economics AD-AS model shows a visual representation of the effects of fiscal policy on the economy if you are further interested.
How did the United states and many European countries initially respond to the decrease in tax revenue caused by the great depression?
Cutting government spending to avoid going into debt
A decrease in federal defense spending in the US is likely to cause?
layoffs at a large defense contracting company
A decrease in federal defense spending in the US is likely to cause which actions?
layoffs at a large defense contracting company
How would the government most likely respond to decrease in consumer spending?
Lower taxes to make it easier for consumers and business to spend money.
