Term
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Definition
| use of government purchases, taxes, and transer payments to alter equilibrium output and prices |
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Term
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Definition
| occurs when government spending exceeds tax revenues for a given fiscal year |
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Term
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Definition
| Occurs when tax revenues are greater than government expenditures for a given fiscal year |
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Term
| Expansionary Fiscal Policy |
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Definition
| use of fiscal policy tools to foster increased output by increasing government purchases, lowering taxes, and/or increasing transfer payment |
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Term
| Contractionary Fiscal Policy |
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Definition
| use of fiscal policy tools to reduce output by decreasing government purchases, increasing taxes, and/or reducing transfer payments |
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Term
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Definition
| a chain reaction of additional income and purchases that redults in total purchases that are greater than the initial increase in purchases |
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Term
| marginal propensity to consume |
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Definition
| the additional consumption resulting from an additional dollar of disposable income |
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Term
| marginal propensity to save |
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Definition
| the change in savings divided by the change in disposable income |
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Term
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Definition
| theory that government borrowing drives up the interest rate, lowering consumption by households and investment spending by firms |
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Term
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Definition
| changes in government transfer payments or tax collections that automatically help counter business cycle fluctuations |
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