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C719

Module 8

QuestionAnswer
The use of government spending and taxes to stabilize the economy. Fiscal policy
During a recession, the government should ____________ spending and ____________ taxes Increase / Decrease
An increase in government spending will... Shift AD right
A decrease in government spending will... Shift AD left
An increase in taxes will... Shift AD left
A decrease in taxes will... Shift AD right
The time it takes the government to identify a need to enact fiscal policy. Recognition lag
The time it takes the government to enact fiscal policy. Implementation lag
The time it takes fiscal policy to have an effect on the economy. Impact lag
When increased government borrowing reduces private investment. Crowding out
Unemployment compensation, Social Security, and income taxes are examples of... Automatic stabilizers
When congress passes a bill that increases spending. Discretionary spending
Created by: chawk69
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