Term
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Definition
| The discretionary changing of government expenditures or taxes to achieve national economic goals, such as high employment with price stability. |
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Term
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Definition
| The tendency of expansionary fiscal policy to cause a decrease in planned investment or planned consumption in the private sector. This decrease normally results from the rise in interest rates. |
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Term
| Ricardian equivalence theorem |
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Definition
| The proposition that an increase in the government budget deficit has no effect on aggregate demand. |
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Term
| direct expenditure offsets |
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Definition
| Actions on the part of the private sector in spending income that offset government fiscal policy actions. Any increase in government spending in an area that competes with the private sector will have some direct expenditure offset. |
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Term
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Definition
| The suggestion that creating incentive for individuals and firms to increase productivity will cause the aggregate supply curve to shift outward. |
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Term
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Definition
| The time required to gather information about the current state of an economy. |
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Term
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Definition
| The time between recognizing an economic problem and implementing policy to solve it. The action time lag is quite long for fiscal policy, which requires congressional approval. |
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Term
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Definition
| The time that elapses between the implementation of a policy and the results of that policy. |
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Term
| automatic/built-in stabilizers |
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Definition
| Special provisions of certain federal programs that cause changes in desired aggregate expenditures without the action of Congress and the president. |
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