Chapter 17: Government Budgets and Fiscal Policy

Discretionary Spending

Mandatory Spending

Supplemental spending

Proportional tax rate

Regressive tax rate

Progressive tax rate

Automatic stabilizers

Budget deficit

Budget surplus

Autonomous expenditure

Marginal propensity to consume

Multiplier effect

How does the process of approving mandatory spending differ from discretionary spending?

What are the different types of tax rates, and what are examples of each?

When would expansionary fiscal policy be implemented, when would contractionary fiscal policy be implemented, how does it influence the aggregate market and the Phillips curve?

What does the marginal propensity to consume measure, and how does it change depending on where we are in the business cycle?

What is the government spending multiplier, and how do we use it to estimate how much to increase or decrease government spending?

What is the tax multiplier, and how do we use it to estimate how to increase or decrease taxes?