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Chapter 15 Assessment

Chapter 15 Assessment - which causes inflation It can also...

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Chapter 15 Assessment 1. Expansionary fiscal policy is a plan to increase aggregate demand and stimulate the economy while concretionary fiscal policy is a plan to reduce aggregate demand and slow the economy. 2. Automatic stabilizers work automatically to steady the economy. 3. To define aggregate demand as the sum of investment, consumer spending, government spending and net exports. It was better for the government to spend money to help stabilize the economy than to have a balanced budget. 4. Supply-side fiscal policy is designed to provide incentives to producers to increase aggregate supply. In other words, demand-side economics uses fiscal policy to encourage consumers to spend more, while supply-side economics focuses on cutting the cost of production to encourage producers to supply more. 5. The government can borrow money to expand the economy or print more money
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Unformatted text preview: which causes inflation. It can also offer people the option to buy bonds. 6. The national debt increases as deficit spending is rising. 7. Luxembourg and the United Kingdom. 8. About 100% between USA and Japan. 9. The supply-side would say that since there is a surplus, there will continue to e a surplus so there could be tax cuts. 10. It is a multiplier effect because you are spending 80% more of that $50 increase and it multiplies as inflation increases. 11. As the government is lagging in progressive policies and steps to bring the economy out of recession, it is limiting what can be done. 12. The federal government was giving out welfare. 13. A balanced budget means no deficit spending unless there was to be revenue....
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