Macro Econ Exam2
Terms
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- changes in government spending and/or taxes that occur automatically without additional congressional action.
- Automatic Fiscal Policy
- The decrease in private spending due to increased government spending.
- Crowding Out
- Deliberate Changes of government spending and/or taxes to achieve particular economic goals.
- Discretionary Fiscal Policy
- The part of the budget deficit that result of a downturn in economic activity.
- Cyclical Deficit
- The change in a persons tax payment divided by the change in taxable income.
- Marginal Tax Rate
- The ratio of the change in consumption to the change of disposable income
- MPC: Marginal Propensity to Consume
- An income tax system in which ones tax rises as one\'s taxable income rises . (up to some point)
- Progressive Income Tax
- The part of the budget deficit that would exist even if the economy were operating at full employment
- Structural Deficit
- An income tax system in which ones tax rate is the same no matter what one\'s taxable income is.
- Proportional Income Tax
- The number multiplied by the change in autonomous spending to obtain the overall change in total spending. (m) = 1/1-MPC
- Multiplier Process
- The value of total output produced at full employment
- Full Employment GDP
- The Ratio of change in savings to the change in disposable income. X = ^S/^Y
- MPS: Marginal Propensity to Save
- A public policy of not interfering with market activities in the economy.
- Laissez Faire
- RealGDP > NaturalGDP then Unemp Rate < Nemp Rate
- Inflationary Gap
- RealGDP < NGDP Unemp > NUnemp
- Recessionary Gap
- Supply creates it\'s own demand...
- Say\'s Law
- Exist when demand & supply variables are in balance under no pressure to change
- Macro Equilibrium
- Increased spending that occurs because real value of money increases when the price level falls.
- Wealth Effect
- The quantity demanded of the Real GDP at different price levels
- Aggregate Demand
- The quantity supplied by the Real GDP at different price levels. Ceteris Peribus
- Aggregate Supply