Fiscal Policy, components and limitations of government economic policy

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6 Terms

1
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Fiscal Policy

Fiscal Policy consists of changes in government spending and tax collection
designed to:
1. Reach full employment,
2. Obtain price stability,
3. Foster economic growth

2
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recognitation lag

best defined as the time period between the beginning of
recession or inflation and an awareness that it is happening for certain

3
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adminsitrative lag

he time period between recognizing that policy action is
needed and when it is actually implemented.

4
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operational lag

the time period between action being ordered and it actually
taking effect.

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Expanisonary

↑Gov Spending or ↓Taxes → fight unemployment

6
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contractionary

↓Gov Spending or ↑Taxes → fight inflation