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Unformatted text preview: taxation that reduce fluctuations in DI and thus consumption, over the business cycle Requires no congressional action to operate year after year (automatic) Reduces the drop in DI during a recession and reduces the jump of DI during expansions so it’s a stabilizer o Discretionary fiscal policy: requires deliberate manipulation of government purchases, transfer payments, and taxes to promote economic goals like full employment price stability o Expansionary fiscal policy: an increase of government purchases or a decrease in next taxes to increase aggregate demand enough to reduce unemployment and return the economy to its potential output o Contractionary fiscal policy: a decrease of government purchases or an increase in next taxes to decrease aggregate demand enough to return the economy to its potential output o...
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This note was uploaded on 01/30/2012 for the course ECONS 102 taught by Professor Kuzyk during the Spring '08 term at Washington State University .
- Spring '08