Unit 6 and 7 - Assignment Essays

question

Wealth Effect

answer

the change in the quantity of aggregate demand that results from wealth changes due to price-level changes

question

interest rate effect

answer

occurs when a change in the price level leads to a change in interest rates and, therefore, in the quantity of aggregate demand

question

exchange rate effect (net export)

answer

As a lower price level reduces interest rates, the dollar depreciates in the market for foreign-currency exchange, which stimulates net exports.

question

Aggregate Demand

answer

the amount of goods and services in the economy that will be purchased at all possible price levels

question

Aggregate Supply

answer

the total amount of goods and services in the economy available at all possible price levels

question

Shifters of Aggregate Demand

answer

consumer spending, investment spending, government spending, net exports

question

Shifters of Aggregate Supply

answer

1. Resource Prices
2. Actions of the Government (ex: taxes, regulations)
3. Productivity
4. Number of Sellers
5. Technology
6. Expectations of Future Prices

question

fiscal policy

answer

the use of government spending and revenue collection to influence the economy

question

Laffer Curve

answer

A relationship between the tax rates and tax revenues that illustrates that high tax rates could lead to lower tax revenues if economic activity is severely discouraged.

question

tax base

answer

A form of wealth- such as income, property, goods, or services- that is subject to taxes

question

tax structure

answer

The way taxes are imposed on different tax bases.

question

progressive tax

answer

A tax for which the percentage of income paid in taxes increases as income increases

question

proportional tax

answer

A tax in which the average tax rate is the same at all income levels.

question

regressive tax

answer

A tax for which the percentage of income paid in taxes decreases as income increases

question

expansionary fiscal policy

answer

An increase in government purchases of goods and services, a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate demand and expanding real output

question

contractionary fiscal policy

answer

Fiscal policy used to decrease aggregate demand or supply. Deliberate measures to decrease government expenditures, increase taxes, or both. Appropriate during periods of inflation.

question

government budget deficit

answer

the value of government spending exceeds revenue from taxation

question

government budget surplus

answer

an excess of government revenues over government spending during a given period of time

question

Balanced government budget

answer

When tax revenue is equal to government spending

question

national debt

answer

the total amount of money that a country's government has borrowed, by various means.

question

What happens to PL and GDP when AD increases?

answer

They both increase

question

What happens to PL and GDP when AD decreases?

answer

They both decrease

question

What happens to PL and GDP when AS increases?

answer

PL Decreases and GDP increases

question

What happens to PL and GDP when AS decreases?

answer

PL increases and GDP decreases

question

Short Run Aggregate Supply

answer

a horizontal line showing the current rate of inflation, as determined by past expectations and pricing decisions

question

Mid-run Aggregate Supply

answer

Upward sloping section where both prices and gdp change

question

long-run aggregate supply curve

answer

The aggregate supply curve associated with a time period in which input prices (especially nominal wages) are fully responsive to changes in the price level.

question

sticky prices

answer

a situation where prices of goods and services are slow to respond to changes in supply and demand

question

Government Revenue

answer

Government income from taxes and non-tax sources

question

Who conducts fiscal policy?

answer

Congress and the President

1 of 30

question

Wealth Effect

answer

the change in the quantity of aggregate demand that results from wealth changes due to price-level changes

question

interest rate effect

answer

occurs when a change in the price level leads to a change in interest rates and, therefore, in the quantity of aggregate demand

question

exchange rate effect (net export)

answer

As a lower price level reduces interest rates, the dollar depreciates in the market for foreign-currency exchange, which stimulates net exports.

question

Aggregate Demand

answer

the amount of goods and services in the economy that will be purchased at all possible price levels

question

Aggregate Supply

answer

the total amount of goods and services in the economy available at all possible price levels

question

Shifters of Aggregate Demand

answer

consumer spending, investment spending, government spending, net exports

question

Shifters of Aggregate Supply

answer

1. Resource Prices
2. Actions of the Government (ex: taxes, regulations)
3. Productivity
4. Number of Sellers
5. Technology
6. Expectations of Future Prices

question

fiscal policy

answer

the use of government spending and revenue collection to influence the economy

question

Laffer Curve

answer

A relationship between the tax rates and tax revenues that illustrates that high tax rates could lead to lower tax revenues if economic activity is severely discouraged.

question

tax base

answer

A form of wealth- such as income, property, goods, or services- that is subject to taxes

question

tax structure

answer

The way taxes are imposed on different tax bases.

question

progressive tax

answer

A tax for which the percentage of income paid in taxes increases as income increases

question

proportional tax

answer

A tax in which the average tax rate is the same at all income levels.

question

regressive tax

answer

A tax for which the percentage of income paid in taxes decreases as income increases

question

expansionary fiscal policy

answer

An increase in government purchases of goods and services, a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate demand and expanding real output

question

contractionary fiscal policy

answer

Fiscal policy used to decrease aggregate demand or supply. Deliberate measures to decrease government expenditures, increase taxes, or both. Appropriate during periods of inflation.

question

government budget deficit

answer

the value of government spending exceeds revenue from taxation

question

government budget surplus

answer

an excess of government revenues over government spending during a given period of time

question

Balanced government budget

answer

When tax revenue is equal to government spending

question

national debt

answer

the total amount of money that a country's government has borrowed, by various means.

question

What happens to PL and GDP when AD increases?

answer

They both increase

question

What happens to PL and GDP when AD decreases?

answer

They both decrease

question

What happens to PL and GDP when AS increases?

answer

PL Decreases and GDP increases

question

What happens to PL and GDP when AS decreases?

answer

PL increases and GDP decreases

question

Short Run Aggregate Supply

answer

a horizontal line showing the current rate of inflation, as determined by past expectations and pricing decisions

question

Mid-run Aggregate Supply

answer

Upward sloping section where both prices and gdp change

question

long-run aggregate supply curve

answer

The aggregate supply curve associated with a time period in which input prices (especially nominal wages) are fully responsive to changes in the price level.

question

sticky prices

answer

a situation where prices of goods and services are slow to respond to changes in supply and demand

question

Government Revenue

answer

Government income from taxes and non-tax sources

question

Who conducts fiscal policy?

answer

Congress and the President

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order