EconCh9 - Chapter 9 Fiscal Policy The governments spending...

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Unformatted text preview: Chapter 9 Fiscal Policy The governments spending and taxing policies. Monetary policy The behavior of the Federal Reserve concerning the nations money supply. Discretionary fiscal policy Changes in taxes or spending that are the result of deliberate changes in government policy. Net taxes (T) Taxes paid by firms and household to the government minus transfer payments made to households by the government. Disposable, or after-tax, income (Y d ) Total income minus net taxes: Y-T Budget deficit The difference between what a government spends and what it collects in taxes in a given period: G-T Government spending multiplier The ratio of the change in the equilibrium level of output to a change in government spending. Tax multiplier The in equilibrium level of output to a change in taxes. Balanced-budget multiplier The ratio of change in the equilibrium level of output to a change in the government spending where the change in government spending is balanced by a change in taxes so as not to create any deficit. spending where the change in government spending is balanced by a change in taxes so as not to create any deficit....
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