Chapter 13`

Question 1

Expansionary Influences on AE

Answer 1

Gov spending inc, ?? inc, taxes decrease

Question 2

Contractionary influences on AE

Answer 2

Gov spending dec, ?? dec, taxes increase

Question 3

expansionary policies address…

Answer 3

recessionary gaps

Question 4

contractionary policies address…

Answer 4

inflationary gaps

Question 5

criticisms of fiscal policy

Answer 5

1. gov spending crowds out private spending
2. gov borrowing crowds out private investment spending
3. gov budget deficits reduce private spending