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Fiscal Policy and Stimulus - CrCo > .22-10-27 Xina's Economy 60% Smaller Than Claimed - Macro > . skip > .
22-10-27 GDP Deflator - Macro > .
Debt ..
Supply and Demand ↠
1) Recessionary gap - a situation wherein the real GDP is lower than potential GDP at the full employment level.
2) Inflationary gap - the amount by which the actual gross domestic product (GDP) exceeds potential full-employment GDP.
3) Macroeconomics - the study of the entire economy as a whole rather than individual markets.
4) Fiscal policy - the way a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.
a. Expansionary Fiscal Policy - stimulates the economy during or anticipation of a business-cycle contraction.
b. Contractionary Fiscal Policy - enacted by a government to reduce the money supply and ultimately the spending in a country.
c. Classical theories assumed that the economy will fix itself in a long run, and that government intervention will, at best, lead to unintended consequences and, at worst, cause massive inflation and debt.
5) Deficit spending - the government spends more money than it collects in tax revenue.
a. Crowding out - where increased public sector spending replaces, or drives down, private sector spending.
b. Keynesian economists maintain that crowding out is only a problem if economy operates at full capacity, where all workers are employed and we're producing as much as we can.
6) Austerity - raising taxes and cutting government spending to reduce debt. In crisis of 2008 was main policy of EU, which led to worse results than deficit spending policy in US.
7) Multiplier effect - the initial increase in government spending of 100$ might turn out to be 175$ worth of actual spending in the economy.
a. When the economy is booming, multiplier is close to 1x.
b. When economy is in recession, the multiplier is around 2x.
c. Spending on infrastructure, and aid to state & local governments , also seems to have fairly high multiplier, about 1.5. But general cuts to payroll and income taxes seems to have a multiplier of about 1:. If the government cuts 100$ in taxes, the economy is going to grow by about 100$.
Inflation ..
Monetarism ..
1) Recessionary gap - a situation wherein the real GDP is lower than potential GDP at the full employment level.
2) Inflationary gap - the amount by which the actual gross domestic product (GDP) exceeds potential full-employment GDP.
3) Macroeconomics - the study of the entire economy as a whole rather than individual markets.
4) Fiscal policy - the way a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.
a. Expansionary Fiscal Policy - stimulates the economy during or anticipation of a business-cycle contraction.
b. Contractionary Fiscal Policy - enacted by a government to reduce the money supply and ultimately the spending in a country.
c. Classical theories assumed that the economy will fix itself in a long run, and that government intervention will, at best, lead to unintended consequences and, at worst, cause massive inflation and debt.
5) Deficit spending - the government spends more money than it collects in tax revenue.
a. Crowding out - where increased public sector spending replaces, or drives down, private sector spending.
b. Keynesian economists maintain that crowding out is only a problem if economy operates at full capacity, where all workers are employed and we're producing as much as we can.
6) Austerity - raising taxes and cutting government spending to reduce debt. In crisis of 2008 was main policy of EU, which led to worse results than deficit spending policy in US.
7) Multiplier effect - the initial increase in government spending of 100$ might turn out to be 175$ worth of actual spending in the economy.
a. When the economy is booming, multiplier is close to 1x.
b. When economy is in recession, the multiplier is around 2x.
c. Spending on infrastructure, and aid to state & local governments , also seems to have fairly high multiplier, about 1.5. But general cuts to payroll and income taxes seems to have a multiplier of about 1:. If the government cuts 100$ in taxes, the economy is going to grow by about 100$.
