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Econ 1-8 Fiscal Policy & StimulusOnline version
STANDARD:
E.5.1 Explain measures of a country's economic performance such as gross domestic product (GDP), unemployment, and inflation. (E)
E.5.3 Identify the different causes of inflation (i.e., cost-push and demand-pull), and explain the impact of inflation on economic decisions. (E)
1
So fiscal policy has its advantages and drawbacks, but it's all about ____ . When people are miserable and unemployed, they want to feel help is on the way. Doing nothing doesn't create the [same] that will get consumers spending again.
2
When Congress creates an annual budget that spends more money than they collect in taxes, this is called ____ spending. Sometimes they do this to get the economy going again.
3
Infrastructure projects like making roads and bridges have strong multipliers, but might take ____ or ____ to complete. So fiscal stimulus may be an important tool for recessions, but it doesn't mean it's easy or that all stimulus is equal.
4
When ____ stop spending, and the economy slows down, the government can start spending to compensate, in hopes of restarting the economy. This is the belief of Keynesian Economics.
5
Targeted tax cuts have lower multipliers since they tend to benefit those with higher incomes, who often ____ rather than spend additional income. And tax cuts put money in people's hands quickly, but that money might get [same] rather than spent.
6
The economic theory that promotes government spending to stimulate the economy was created by ____ ____ ____ . He significantly impacted modern economics, but not everyone agrees with him.
7
Different policies have different multipliers. Spending on unemployment & ____ is the biggest bang for our buck. People with low incomes are likely to spend additional income. Spending on infrastructure also have a high multiplier, about 1.5.
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_____ fiscal policy takes place when there is too much money in the economy and prices are too high. It involves the government decreasing spending & increasing taxation. This reduces the number of government jobs and the amount of available money.
9
The impact of economic multipliers depends upon the economy. When the economy is in _____ , lots of unemployed workers & unused capital, the multipliers is 2. $100 or government spending leads to $200 of spending, which puts people back to work.
10
____ fiscal policy takes place when the government increases its spending by creating jobs for people who build roads and bridges. These laborers now have income, which they spend in the economy, hopefully stimulating its growth.
11
Economic multipliers depend on different situations. When the economy is ____ ____ , the multiplier is one. Everyone's working, government wants a road, they hire workers from private sector. Public increases, but private falls, GDP is unchanged.
12
Congress will lower ____ & raise ____ in order to combat a poor economy, when people are unemployed & sales are down.
13
Stimulus policy is complicated because of the ____ ____ . The idea that government spends $100 & the construction worker who got the money will save $50 & spend $50 on a concert. The musician who got that $50 will save $25 & spend $25, etc
14
If the economy is moving too quick or slow, Congress & the President can slow it down or speed it up, either by spending money or collecting taxes. This is called ____ ____ .
15
2011, U.S. and European policies started to diverge, the U.S. economy has grown at an rate of 2.5% while the Euro-zone GDP ____ by 1%. U.S. unemployment fell to 5.5%, while Euro-zone unemployment rose to 12%.
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A bad economy creates many problems. e.g. When people don't have jobs, there is an increase in ____ and in household ____ , & even nation-wide revolution.
17
"Crowding Out" does not happen when the economy is ____ ____ , with unemployed workers and vacant factories. Now, government spending can put idle resources to work. Keynesians argue that newly hired workers start spending money.
18
All workers have jobs, businesses are making everything they can. But with so many workers buying, resources become scarce & businesses raise prices, creating inflation. These are symptoms of an _____ gap.
19
Some argue that Keynesian policy causes debt, that deficit spending leads to ____ ____ . If the government borrows money, that increases interest rates, making it harder to buy factories & tools. The public sector [same] the private sector
20
Lots of people don't have jobs, which means they have no money for shopping, which means businesses stop making products. These are symptoms of a _____ gap, when the government could cut taxes and increase spending to restart the economy.
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Chapter 4A Jumbled Words