Term
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Definition
| structural features of government spending and taxation that reduce fluctuations in disposable income, and thus consumption, over the business cycle |
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Term
| discretionary fiscal policy |
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Definition
| the deliberate manipulation of government purchases, taxation and transfer payments to promote macroeconomic goals, such as full employment, price stability, and economic growth |
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Term
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Definition
| the ratio of a change in real GDP demanded to the initial change in autonomous net taxes that brought it about; the numerical value of the simple tax multiplier is -MPC/(1-MPC) |
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Term
| expansionary fiscal policy |
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Definition
| a decrease in government purchases, increasing net taxes, or some combination of the two aimed at reducing aggregate demand enough to return the economy to potential output without worsening inflation; fiscal policy used to close an expansionary gap |
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Term
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Definition
| a group of 18th-19th century economists who believed that economic downturns corrected themselves through natural market forces; thus, they believed that economy was self-correcting and needed no government intervention |
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Term
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Definition
| law that assigned to the federal government the responsibility for promoting full employment and price stability |
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Term
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Definition
| economic fluctuations that occur when discretionary policy is manipulated for political gain |
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Term
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Definition
| income that individuals expect to receive on average over a long time |
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