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Unformatted text preview: Fiscal Policy Notes 1. Sources of Tax Revenue for US Government a. Personal income taxes b. Other taxes c. Social Insurance Taxes d. Corporate Profit Taxes 2. Government Spending for US a. Education b. Medicare and Medicaid c. National defense d. Social Security e. All other goods and services 3. As previously discussed, GDP = C+I+G+Nx 4. Fiscal Policy = the use of taxes, government transfers, or government purchases of goods and services to shift the aggregate demand curve. 5. Expansionary Fiscal Policy used to close a recessionary Gap. This is when the supply and demand curves intersect to the left of the LRAS. Expansionary Fiscal Policy moves the Aggregate Demand curve to the right. 6. Contractionary Fiscal Policy used to close an inflationary Gap. This is when the supply and demand curves intersect to the right of the LRAS. Contractionary Fiscal supply and demand curves intersect to the right of the LRAS....
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- Fall '10
- Fiscal Policy