________ alters the money supply primarily by changing the quantity of reserves in the banking system through the purchase and sale of government bonds in open- market operations.
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aggregate demand
The use of policy instruments to stabilize ________ and, as a result, production and employment.
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3
Fiscal policy
________- the setting of the level of government spending and taxation by government policymakers.
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personal income
When the government cuts ________ taxes, it increases households take- home pay.
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5
Automatic stabilizer
________- changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policymakers having to take any deliberate action.
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quantity of money
The ________ demanded exactly balances the ________ supplied.
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Multiplier effect
________- the additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases consumer spending.
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Crowding-out effect
the offset in aggregate demand that results when expansionary fiscal policy raises the interest rate and thereby reduce.
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9
fiscal policy
The government can adjust its monetary and ________ in response to those waves of optimism and pessimism.
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10
aggregate demand
It shifts the ________ curve indirectly by influencing the spreading decisions of firms and households.
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