Expansionary fiscal policy occurs when the Congress acts to cut tax rates or increase government spending, shifting the aggregate demand curve to the right. Fiscal policy, for instance, is commendably tight; t contractionary fiscal policy Discretionary fiscal policy _____ is the deliberate manipulation of government purchases, transfer payments, and taxes to promote macroeconomic goals. 75+1 sentence examples: 1. Expansionary monetary policy is simply a policy which expands (increases) the supply of money, whereas contractionary monetary policy contracts (decreases) the supply of a country's currency. Contractionary Fiscal Policy . The long-term impact of inflation can damage the standard of living as much as a recession. Definition: Contractionary fiscal policy is an economic method that governments and central banks use to reduce the money supply in the economy to combat inflation. A. a tax cut passed by Congress to fight a recession B. income tax receipts increasing during an expansion due to rising incomes C. unemployment insurance payments increasing during a recession D. economic expansion causing a decrease in the number of food stamps issued Generally speaking contractionary monetary policies and expansionary monetary policies involve changing the level of the money supply in a country. Expansionary fiscal policy actions include _____ government spending and/or _____ taxes, while contractionary fiscal policy actions include _____ government spending and/or _____ taxes. Why does discretionary fiscal policy often fail? Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals. The second type of fiscal policy is contractionary fiscal policy, which is rarely used. For example, look at the Greek debt crisis. Republican cause sequester of the government contracted fiscal spending by shutting down all non essential government functions, thus slowing the economy and exacerbating the ill effects of the Great Recession. Which of the following is an example of discretionary fiscal policy? In other words, it represents the tools that the government can use to help stabilize the economy and smooth out bubbles and upswings where inflation is more likely. That then reduces job growth. A spending cut means less money goes toward government contractors and employees. Which of the following is an example of crowding out? Contractionary fiscal policy is when the government cuts spending or raises taxes. 4. When Congress raises taxes, it also slows growth. Fiscal policy, measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. A transfer payment _____ flows from government to households. The tools of contractionary fiscal policy are used in reverse. It slows economic growth. 3. Learn more about fiscal policy in this article. On the other hand, discretionary fiscal policy is an active fiscal policy that uses expansionary or contractionary measures to speed the economy up or slow the economy down. Its goal is to slow economic growth and stamp out inflation. The increase of taxation is an important fiscal policy. An example of government spending as expansionary fiscal policy is the American Recovery and Reinvestment Act of 2009. 2. How does fiscal policy affect the inequality of incomes?
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