1. Sides Game

2. Contractionary Fiscal Policy should only be implemented when the SR macroeconomic equilibrium is to which side of LRAS right

3. Keynes argued that fiscal policy should be used to influence AD or AS

4. Revenue > Expenditure
surplus

5. debt
Sum of all deficits (+) and surplus (-) =

6. Stabilization policies are used to encourage sustainable growth while maintaining the delicate balance between inflation and unemployment

7. Change it tax laws, stimulus checks, building new stuff
Give an example of discretionary fiscal policy

8. Revenue = Expenditure
Balanced Budget

9. Progressive tax brackets, food stamps, welfare
Give an example of an automatic stabilizer

10. Expansionary Fiscal Policy should only be implemented when the SR macroeconomic equilibrium is to which side of LRAS left

11. Social security
Most intragovernment (interdepartmental) debt is held in this programs trust fund

12. Cyclical deficit
Deficit that grows during a recessionary gap and becomes a surplus during an expansionary gap

13. recognition
Which lag is identical in monetary and fiscal policy?

14. List the 3 tools of the Fed
Open market operations
Discount rate
Reserve requirement

15. Decision and implementation
Which two lags are MUCH longer in fiscal policy?

16. Less (for fear of future tax increases)
According to the Ricardo-Barro theory, increased government deficit spending leads to
More or less spending by consumers and businesses

17. Which is the main tool of monetary policy?
Open market operations (buy/sell securities)

18. Which rate is targeted by OMO?
Federal funds rate
Rate banks charge each other for overnight loans

19. Which combination will definitely increase AD?
Discount Rate decrease
Government Spending increase
Open Market Operations buy bonds

20. When further increases in the money supply do not decrease interest rates, the economy has fallen into a liquidity trap

21. The Phillips Curve looks at the relationship between
Unemployment rate and inflation rate

22. Which combination will definitely reduce the inflation rate?
Discount Rate increase
Government Spending decrease
Open Market Operations sell bonds

23. The crowding out effect is caused by
Government deficit spending or Open Market Operations
increase demand for loanable funds

24. When the Fed sells bonds, what happens to
Interest rates increase
Investment decrease
RGDP decrease
PL decrease

25. Revenue < Expenditure
deficit

26. The LRPC looks just like which curve from the AD/AS model?
LRAS

27. Trickle down
Supply side economics is sometimes called *not the Reagan one

28. Laffer curve (don’t worry about it)
Which curve shows that lower tax rates may produce more government revenue?

29. Buy bonds
What should the Fed do to counter crowding out?
Buy or Sell?

30. GAME OVER!

31. Models Be Able to Draw Just Know AD/AS Money Market Loanable Funds
Phillips Curve
Just Know
Laffer Curve
Investment Demand