Macroeconomics Flashcards: 13

Flashcards covering key concepts from the Macroeconomics lecture, focusing on fiscal policy, GDP determination, and economic stabilization.

Fiscal Policy

Use of government spending or taxes to achieve economic goals such as full employment, price stability, and economic growth.

Crowding-out Effect

A situation where increased government spending leads to a decrease in private-sector spending.

Supply-Side Economics

An economic theory focused on increasing the capacity to produce goods and services, shifting the AS curve to the right.

Recognition Time Lag

Time required to collect data and identify that an economic problem exists.

Action Time Lag

Time it takes for Congress to determine a policy action and implement it.

Effect Time Lag

Time it takes for a fiscal policy to make a noticeable impact on the economy.

Automatic Stabilizers

Taxes or spending programs that adjust automatically and countercyclically based on economic conditions.

Increase in government spending or a decrease in taxes

Expansionary fiscal policy tool to remove a recessionary gap.

Decrease in government spending or an increase in taxes

Contractionary fiscal policy tool to remove an inflationary gap.