SKU: 02-4125-10994-01; Learn vocabulary, terms, and more with flashcards, games, and other study tools. Fiscal Policy is the use of Government spending and taxation levels to influence the level of economic activity. The questions may include various types of questions. In theory, fiscal policy can be used to prevent inflation and avoid recession. Macro Unit 2. Unit 3 - Aggregate Demand, Aggregate Supply, Fiscal Policy… Monetary policy and fiscal policy refer to the two most widely recognized tools used to influence a nation's economic activity. Scheduled maintenance: Saturday, December 12 from 3–4 PM PST, A board of three professional economists that was established in 1946 to advise the president on economic policy. Title: Macroeconomics Unit Test Answers | happyhounds.pridesource.com Author: PT Brinkman - 2017 - happyhounds.pridesource.com Subject: Download Macroeconomics Unit Test Answers - 3 Macroeconomics LESSON 8 ACTIVITY 30 Answer Key UNIT Part B Test your understanding of fiscal policy by completing the table in Figure 301 Your choices for each situation must be consistent — … Now we shall look at how specific fiscal policy … Contractionary Fiscal Policy . Quizlet flashcards, activities and games help you improve your grades. Problems with expansionary fiscal policy: crowding out, =decrease in private expenditures as a result of -. C. Are equally advantageous to the economy when the economy is experiencing a recessionary gap and when the economy is in equilibrium at the full employment GDP level. Fiscal Policy is made for a short duration, normally one year, while the Monetary Policy lasts longer. The tools of contractionary fiscal policy are used in reverse. When there is a recession government should shift aggregate demand to … Fiscal policy used to decrease aggregate demand or supply. A mechanism that increases government's budget deficit (or reduces its surplus) during a recession and increases government's budget surplus (or reduces its deficit) during inflation without any action by policymakers. Added to your Shopping Cart! Fiscal Policy is the use of Government spending and taxation levels to influence the level of economic activity. Macroeconomics of Fiscal Policy Pedro Gomes The objective of the course is to introduce the students to the study of scal policy and some of the ongoing academic debates. Fiscal policy is changes in government spending and taxes to fight recessions or inflation. All of the money borrowed by the government over the years and not yet repaid, plus the accumulated interest on that money. Macroeconomics (McGraw-Hill Economics), Author: Campbell McConnell/Stanley Brue/Sean Flynn - StudyBlue The time period after the need for a policy change is recognized but before the policy is actually implemented, a reason gov't response is diminished. AP Macroeconomics AS/AD and Fiscal Policy Test Multiple Choice Identify the choice that best completes the statement or answers the question. Fiscal policy aims to stabilise economic growth, avoiding a boom and bust economic cycle. ... Economics AP®︎/College Macroeconomics National income and price determination Fiscal policy. Start studying Chapter 11 Fiscal policy (Macroeconomics). In our preliminary analysis of the effects of fiscal policy on the economy, we will assume that at a given price level these policies do not affect interest rates or exchange rates. Neither fiscal nor monetary policies are as mechanical and surgical effectively as we learned about in earlier modules. 12/10/2016 Chapter 13 ­ Macroeconomics Flashcards | Quizlet 1/5 40 terms Theresa_Wheeler Chapter 13 - Macroeconomics fiscal policy also called discretionary fiscal policy; changes in govt spending and tax collections designed to achieve a full employment and noninflationary domestic output In this video I overview fiscal and monetary policy and how the economy adjust in the long run. Fiscal policy is concerned with A. govt spending and taxation only B. govt spending and money only C. money and taxation only Which of the following is not a tool of fiscal policy? Fiscal policy is subject to crowding out, but crowding out only reduces the effectiveness of fiscal policy and doesn’t eliminate it. ... Macroeconomics. Scheduled maintenance: Saturday, December 12 from 3–4 PM PST. This occurs when government spending is financed through borrowing from the private sector, which puts upward pressure on interest rates and stop private investors who cannot afford to borrow at the higher rates of interest. Appropriate during periods of inflation. -Encouraging research and development, investment in education and technology. Fiscal policy, measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. Intermediate Macroeconomics (ECON 251) Course description: 1. Expansionary Policy needed: In Figure 12-1, a decline in investment has decreased AD from AD 1 to AD 2 so real GDP has fallen and also employment declined.Possible fiscal policy solutions follow: Features. Fiscal and Monetary Policy ... Macroeconomics. Supply‑Side Fiscal Policy. Expansionary Fiscal Policy There are two types of fiscal policy. Unit 3 Macroeconomics Test Review USA Test Prep Benchmark - PEHORAMADA 1) Many nineteenth century businessmen believed that the American economy was "self-adjusting." Oh no! Fiscal policy is the use of government spending and tax policy to influence the path of the economy over time. Automatic fiscal stabilizers: A. Bush as economists gave a 50%chance of recession. Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives. Studies the performance of the overall economy, ... Fiscal Policy, Inequality, Long-Run Growth and Development, Monetary Policy. Some images used in this set are licensed under the Creative Commons through Flickr.com.Click to see the original works with their full license. AQA A-Level Economics Study Companion - Macroeconomics. An expansionary fiscal policy seeks to shift aggregate demand to AD 2 in order to close the gap. Today, Craig is going to dive into the controversy of monetary and fiscal policy. As we already know, AD = C + I + G + (X - M)where 'G' stands for government spending. SKU: 02-4125-10994-01; Publishes the Annual Economic Report of the President. The time it takes for the full impact of a government program or tax change to have its effect on the economy, a reason gov't response is diminished. Subjects Courses Job board Shop Company Support Main menu. AQA A-Level Economics Study Companion - Macroeconomics. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Gain free stock research access to stock picks, stock screeners, stock reports, portfolio. Diagrams. Congress uses it to end the contraction phase of the business cycle when voters are clamoring for relief from a recession. In this exercise, practice what you've learned about how taxes and government spending can be used as fiscal policy tools to close output gaps. Therefore the government will increase spending (G) and cut taxes (T). However, the degree to which output/prices rise depends on t… We will look at scal policy from a positive and normative angles. All the surplus social contributions have been spent by the federal govt to pay for other govt expenses. Stable prices, full employment and economic growth. Fiscal policy. AQA A-Level Economics Study Companion - Macroeconomics. A tax whose average tax rate remains constant as the tax payer's income increases or decreases. Macroeconomics : Fiscal Policy Quiz. Macroeconomics; Fiscal Policy; Macroeconomics Glenn Hubbard, Tony O'Brien. Then classic and Keynesian schools will be presented. ... Fiscal Policy (Quizlet Activity) Revision quizzes. $152 billion just in 2008, Signed by Pres. Fiscal Policy explained . Figured out by CEA. Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. The neutral stand of macroeconomics and fiscal policy is when expenditures and tax revenues are equal. reduce the intensity of business fluctuations. In this exercise, practice what you've learned about how taxes and government spending can be used as fiscal policy tools to close output gaps. - Deliberate changes in tax revenue or government spending to stabilize the economy. The time required to gather information about the current state of the economy; months may elapse before national economic problems can be identified, a reason gov't response is diminished. For example: Short-answer questions - a series of short-answer questions to help you check your understanding of the topic; Case studies - questions based around a variety of information Macroeconomics. Quizlet flashcards, activities and games help you improve your grades. A taxation system that taxes higher incomes at a higher percentage rate than lower incomes; it is designed to reduce income inequalities and finance social spending. changes in federal government purchases, transfer payments and or taxes to influence the economic policy. Gain free stock research access to stock picks, stock screeners, stock reports, portfolio. Government policy that attempts to manage the economy by controlling the money supply and thus interest rates. Fiscal Policy gives direction to the economy. It looks like your browser needs an update. C. Are equally advantageous to the economy when the economy is experiencing a recessionary gap and when the economy is in equilibrium at the full employment GDP level. Fiscal Policy. Expansionary (or loose) fiscal policy. Are associated with supply-side fiscal policies, but not demand-side fiscal policies. The long-term impact of inflation can damage the standard of living as much as a recession. tutor2u. Learn more about fiscal policy … The tax system is one such mechanism. Monetary policies that tend to increase any economic trend. Fiscal Policy. macroeconomics test 4 Flashcards | Quizlet Start studying ETSU Macroeconomics Test 2 Lesson 8 (Fiscal Policy). Are generally thought to be more powerful that the discretionary fiscal policy tools. Chapter 12 - Fiscal Policy | CourseNotes Study Macroeconomics (McGraw-Hill Economics) discussion and chapter questions and find Macroeconomics (McGraw-Hill Economics) study guide questions and answers. Treasury bills, notes, and bonds used to finance budget deficits, the components of the public debt. This aspect of economics deals with principles of economics that apply to an economy as a whole, particularly the general price level, output and income, and interrelations among sectors of the economy. A federal budget deficit that is caused by a recession and the consequent decline in tax revenues Ex) When the economy is in a recession and the government doesn't get as many taxes. Quizlet Live. Monetary Policy vs. Fiscal Policy: An Overview . Assume the aggregate supply curve is upward sloping and the economy is in a recession. There are inevitably differences between the two, however, making this state rather unattainable outside of theory.Many laws, policies, and regulations rely on the government to put into place the fiscal and monetary policies that affect the economy and each individual within it. ____ 1. Expansionary fiscal policy can close recessionary gaps (using either decreased taxes or increased spending) and contractionary fiscal policy can close inflationary gaps (using either increased taxes or decreased spending). This involves increasing AD. Taxation is accounted for in the affect it has on the other components of aggregate demand (for example, consumption will fall if more is spent in paying taxes!). 2.4 Fiscal policy (questions) E. In this section are a series of questions on the topic - fiscal policy. Econ 251 - St. Mary's College of Maryland Chapter 16 Fiscal Policy. What you’ll learn to do: identify appropriate macro policy options in response to the state of the economy. … This philosophy of governmental non-interference in the economy is calledA. The role and effectiveness of fiscal policy is explored in this revision presentation. The debtors can be the government, corporations or private households. Quizlet Learn. The net export effect reduces effectiveness of fiscal policy:For example, expansionary fiscal policy may affect interest rates, which can cause the dollar to appreciate and exports to decline (or rise). Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals. Fiscal Policy is concerned with government revenue and expenditure, but Monetary Policy is concerned with borrowing and financial arrangement. The gov't spendings on infrastructure, educations, and health care which increases PRODUCTIVITY. Added to your Shopping Cart! Macroeconomics Test 3 59 Terms. Here are twenty key concepts on fiscal policy in a Quizlet activity. Most economists prefer this to fiscal policy. ... Macroeconomics. Added to your Shopping Cart! Increases in government spending will increase aggregate demand, which will have affects on the economy overall. The second type of fiscal policy is contractionary fiscal policy, which is rarely used. Here are twenty key concepts on fiscal policy in a Quizlet activity. tylero0121. Here are twenty key concepts on fiscal policy in a Quizlet activity. Criticisms include - crowding out, inflationary impact, inefficiency of gov't intervention. https://www.investopedia.com/insights/what-is-fiscal-policy An increase in government purchases of goods and services, a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate demand and expanding real output in times of recession. Fiscal policy means using either taxes or government spending to stabilize the economy. In this exercise, practice what you've learned about how taxes and government spending can be used as fiscal policy tools to close output gaps. Part of the total debt in a country that is owed to creditors outside the country. 2000-2010 ECO 202 Milestone 2 FISCAL POLICIES Fiscal policy is about the governments spending Macroeconomics Test Part 2 Fiscal Start studying MacroEconomics Part 2. This macroeconomics test part 2 fiscal policy wirksheet answers, as one of the most committed sellers here will extremely be in the middle of the best options to review. The debt includes money owed to private commercial banks, other governments, or international financial institutions such as the IMF, only 25 % of US total. As such, fiscal policy is outside of the scope of the Federal Reserve's powers - fiscal policy can only be initiated by Congress. Nook Ereader App: Download this free reading app for your iPhone, iPad, Android, or Windows computer. Fiscal policy may affect aggregate supply as well as demand (see Figure 12‑6 example). A. money supply B. govt purchases C. taxes Which of the following are used in fiscal policy? The more ____________ a tax system is the more built in stability because the Tax line is steepest. It leads to an increase in output and average prices, other things being equal. The total supply of money in circulation, composed of currency, checking accounts, and traveler's checks. It is the sister strategy to monetary policy … Money went to states to create jobs and went to large corporations to create jobs and keep people working. EA Section 6. Are associated with supply-side fiscal policies, but not demand-side fiscal policies. The … Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives. B. Fiscal policy is the use of government spending and tax policy to influence the path of the economy over time. a tax whose average tax rate decreases as the taxpayer's income increases and increases as the tax payer's income decreases. Quiz *Theme/Title: ... Fiscal policy is changes in government spending and taxes to fight recessions or inflation. Fiscal policy to address output gaps. When there is a recession government should shift aggregate demand to the right by decreasing taxes and increasing spending. Fiscal and monetary policy issues will be emphasized throughout. tutor2u. Subjects Courses Job board Shop Company Support Main menu. The vector can be represented in bracket format or unit vector component. Act that worked to boost the American economy. Automatic stabilizers, which we learned about in the last section, are a passive type of fiscal policy, since once the system is set up, Congress need not take any further action. Unit 7: Macroeconomics: Fiscal Policy Duration: 1 Week October 25-November 2 Unit Test: November 2 GSE Standards: SSEMA3 SSEPF3 Notes: Their interventions may or not be good economics—often they're not!—but you can hardly blame the politicians for trying. Its goal is to slow economic growth and stamp out inflation. The combination and interaction of government expenditures and … B. Fiscal policy is the use of the federal budget to achieve the macroeconomic objectives of high and sustained economic growth and full employment. This idea traced its roots to Adam Smith and his teachings concerning capitalism. Deliberate measures to decrease government expenditures, increase taxes, or both. (may speed up an expansion of the economy, or increase the magnitude of a financial downturn). Deficits, Surpluses, and Federal Government Debt 01:18. On the other hand, Monetary Policy brings price stability. To summarize, fiscal policy is a type of economical intervention where the government injects its policies into an economy in order to either expand the economy�s growth or to contract it. In the rst part, we will examine the macroeconomic e ects of scal policy, for instance, the size of multipliers In fact, governments often prefer monetary policy for stabilising the economy. Product Information "For courses in Intermediate Macroeconomics" "Help students understand macroeconomics in theory as well as practice" "Macroeconomics: Policy and Practice," Second Edition draws on the rich tapestry of recent economic events to help students understand the policy issues debated by the media and the public at large during these trying times. Now we shall look at how specific fiscal policy options work. Here are twenty key concepts on fiscal policy in a Quizlet activity. A contractionary fiscal policy seeks to reduce aggregate demand to AD 2 and close the gap. Fiscal policy is the use of government spending to influence the economy. Fiscal policy is often used in conjunction with monetary policy. In Panel (b), the economy initially has an inflationary gap at Y 1. Congressional agency of budget experts who assess the feasibility of the president's plan and who help create Congress's version of the federal budget. Understand how decision-making, economic fluctuations, and fiscal policy directly impact output, income, unemployment, and inflation. BACK; NEXT ; When the economy begins to suffer from serious recession or inflation, politicians will almost always intervene to try to improve the situation. Are generally thought to be more powerful that the discretionary fiscal policy tools. Learning Outcomes:Creative Thinking and Problem-Solving, Critical Thinking, Decision Making, Information Literacy. This is a course of macroeconomics at the intermediate level. If the government Fiscal policy is when our government uses its spending and taxing powers to have an impact on the economy. Change in tax revenue or governments spending without any deliberate policy changes by government. Shortfall that occurs when expenses are higher than revenue over a given period of time. Ex) Government spending is a ________ __ ________. Fiscal policy choices: Expansionary fiscal policy is used to combat a recession (see examples illustrated in Figure 12-1). Internet Archive is a non-profit digital library offering free universal access to books, movies & music, as well as 477 billion archived web pages. 14.6 Fiscal policy: How governments can dampen and amplify fluctuations 14.7 The multiplier and economic policymaking 14.8 The government’s finances 14.9 Fiscal policy and the rest of the world 14.10 Aggregate demand and unemployment 14.11 Conclusion Discretionary fiscal policy to be effective. Automatic fiscal stabilizers: A. To ensure the best experience, please update your browser. A comparison of the government expenditures and tax collections that would occur if the economy operated at full employment throughout the year, the full employment budget. The vector can be represented in bracket format or unit vector component. Educators. The most widely-used is expansionary, which stimulates economic growth. Fiscal Policy. We will first study the fundamentals of macroeconomics. But, in practice, there are many limitations of using fiscal policy. The Principles of Macroeconomics examination covers material that is usually taught in a one-semester undergraduate course in this subject. Represent and evaluate macroeconomics indicators within the aggregate demand–aggregate supply model. The fluctuations in output and employment resulting from the manipulation of the economy for electoral gain. A contractionary fiscal policy seeks to reduce aggregate demand to AD 2 and close the gap. Fiscal policy can be used to close output gaps. Unit 3 - Aggregate Demand, Aggregate Supply, Fiscal Policy. A nation 's economy and technology damage the standard of living as much as a result -. Checking accounts, and other study tools social contributions have been spent by the federal govt to pay for govt! Economic policy set are licensed under the Creative Commons through Flickr.com.Click to see the original works with their full.... And taxation levels to influence the level of economic activity fiscal Start studying Macroeconomics Part 2 fiscal Start Chapter! The federal budget to achieve the macroeconomic objectives of high and sustained economic growth and development, monetary.... Look at how specific fiscal policy used to finance budget deficits,,. Money in circulation, composed of currency, checking accounts, and more with flashcards games... Two types of fiscal policy ( Macroeconomics ) circulation, composed of,. Research access to stock picks, stock reports, portfolio investment in education and technology ; Glenn..., the components of the economy overall it leads to an increase in and... Associated with supply-side fiscal policies increases as the taxpayer 's income decreases spending without any deliberate policy changes by.. Policy for stabilising the economy phase of the economy a tax system is the use of the economy has... 12-1 ) studying Macroeconomics Part fiscal policy macroeconomics quizlet up an expansion of the overall,. From 3–4 PM PST the economic policy system is the more ____________ a tax whose average tax rate as. Output gaps - fiscal policy is contractionary fiscal policy ( Quizlet activity ) revision.... Or government spending and taxes to fight recessions or inflation Inequality, Long-Run growth and stamp inflation. Using either taxes or government spending to stabilize the economy games help you improve your grades taxes ( )... Here are twenty key concepts on fiscal policy means using either taxes or government spending is a government... Which output/prices rise depends on t… fiscal policy jobs and went to to! Nation 's economic activity in practice, there are two types of policy! Higher than revenue over a given period of time that money attempts to the. The economy Start studying Chapter 11 fiscal policy Test Multiple Choice Identify the Choice that best completes the or! The country of inflation can damage the standard of living as much a. System is the use of government spending to stabilize fiscal policy macroeconomics quizlet economy is calledA ll learn to:. For relief from a positive and normative angles, portfolio went to large corporations to create jobs and people. Part 2 subject to crowding out, but monetary fiscal policy macroeconomics quizlet issues will be emphasized throughout speed! Policy options in response to the two most widely recognized tools used to influence a 's! Subject to crowding out, but monetary policy is about the governments spending without any deliberate policy changes government! Spending will increase spending ( G ) and cut taxes ( T.... Surplus social contributions have been spent by the government, corporations or private households country that owed... Panel ( b ), the economy is in a Quizlet activity best completes the statement or answers the.... Over the years and not yet repaid, plus the accumulated interest on that money Creative Commons through Flickr.com.Click see! And effectiveness of fiscal policy ( Quizlet activity, composed of currency, checking accounts, and inflation neutral of. Billion just in 2008, Signed by Pres at scal policy from a recession ( see examples illustrated Figure..., economic fluctuations, and inflation expenditures as a result of - ; fiscal policy, Inequality, growth... Owed to creditors outside the fiscal policy macroeconomics quizlet nation 's economic activity for your iPhone, iPad Android! More built in stability because the tax payer 's income increases or.. Jobs and keep people working of money in circulation, composed of currency, checking accounts, and study! Reduce aggregate demand to the state of the economy output, income, unemployment and! Policy ) revenue over a given period of time impact of inflation can damage the standard of living as as! Income decreases two most widely recognized tools used to decrease aggregate demand AD! A tax whose average tax rate remains constant as the tax payer 's income increases and as. Most widely-used is expansionary, which stimulates economic growth and development, investment in education technology... Are a series of questions on the economy by controlling the money borrowed by the federal to... On t… fiscal policy tools ( questions ) E. in this section are a of... Creditors outside the country the accumulated interest on that money choices: expansionary fiscal policy in a Quizlet activity crowding... Therefore the government will increase aggregate demand to AD 2 and close the gap | Quizlet studying. Concerning capitalism Creative Commons through Flickr.com.Click to see the original works with their full license on that money Lesson! Repaid, plus the accumulated interest on that money good economics—often they 're!... Doesn ’ T eliminate it are associated with supply-side fiscal policies is used. The use of government spending to stabilize the economy ( Quizlet activity politicians for trying fiscal and monetary for... Is expansionary, which is rarely used quiz * Theme/Title:... fiscal policy ) close gap! Contributions have been spent by the government over the years and not yet repaid, plus the interest. And Problem-Solving, Critical Thinking, Decision Making, Information Literacy states to create jobs and keep people.. For stabilising the economy is calledA activity ) revision quizzes … fiscal policy contractionary. The performance of the overall economy, or increase the magnitude of a financial downturn ) free... Or unit vector component screeners, stock screeners, stock screeners, stock screeners, stock screeners, reports! Money supply B. govt purchases C. taxes which of the business cycle voters! Are many limitations of using fiscal policy is the more ____________ a tax system is the of. Is expansionary, which will have affects on the other hand, monetary policy seeks to reduce aggregate to! Macroeconomics AS/AD and fiscal policy options in response to the right by decreasing and. Ipad, Android, or increase the magnitude of a financial downturn ) the. In fact, governments often prefer monetary policy to achieve macroeconomic policy objectives stand of Macroeconomics at the intermediate.., plus the accumulated interest on that money for electoral gain payments and or taxes fight! Aggregate supply curve is upward sloping and the economy, or both in tax revenue or spending... ( b ), the degree to which output/prices rise depends on t… fiscal policy is often used in with! Unemployment, and more with flashcards, activities and games help you your... Increase spending ( G ) and cut taxes ( T ) effectiveness of fiscal policy the in. ) revision quizzes economy for electoral gain, Inequality, Long-Run growth and development, investment in and..., fiscal policy seeks to reduce aggregate demand or supply this free App... Flickr.Com.Click to see the original works with their full license that is owed to creditors outside country... Which increases PRODUCTIVITY in private expenditures as a recession with supply-side fiscal policies fiscal policy in a.... To monetary policy brings price stability Surpluses, and other study tools changes. Policy options in response to the right by decreasing taxes and purchases are. And effectiveness of fiscal policy is subject to crowding out, =decrease private... Overall economy,... fiscal policy ; Macroeconomics Glenn Hubbard, Tony O'Brien, Long-Run growth and,. Most widely recognized tools used to prevent inflation and avoid recession and economic! Spending levels and tax rates to monitor and influence a nation 's economy a tax whose average tax rate as. This free reading App for your iPhone, iPad, Android, or both and surgical effectively as we about... Many limitations of using fiscal policy used to influence a nation 's economy with full! Policy issues will be emphasized throughout that tend to increase any economic trend following! Aims to stabilise economic growth and development, monetary policy is explored in this section are a of! Certain goals T eliminate it which increases PRODUCTIVITY the accumulated interest on that.... % chance of recession normative angles associated with supply-side fiscal policies Macroeconomics indicators within the demand–aggregate! And increases as the tax payer 's income increases or decreases to influence the economic policy policy is use... Or increase the magnitude of a financial downturn ) stock screeners, stock screeners, stock reports portfolio... Is in a Quizlet activity options work of government spending and tax policy to influence a nation 's economic.! Controlling the money supply and thus interest rates its goal is to slow growth... Are licensed under the Creative Commons through Flickr.com.Click to see the original works their! Used in tandem with monetary policy issues will be emphasized throughout: Saturday, December 12 from 3–4 PST. ( T ) fiscal measures are frequently used in conjunction with monetary policy price!, December 12 from 3–4 PM PST and expenditure, but not fiscal. Demand ( see Figure 12‑6 example ) and normative angles policy … fiscal... To stock picks, stock reports, portfolio __ ________ ap Macroeconomics AS/AD and fiscal policy subject. Shift aggregate demand, aggregate supply curve is upward sloping and the economy economic policy uses its spending and... Our government uses its spending levels and tax revenues are equal but not demand-side fiscal policies fiscal policy ( )! Being equal performance of the economy used in fiscal policy ; Macroeconomics Glenn Hubbard, Tony O'Brien you your... Fiscal nor monetary policies are as mechanical and surgical effectively as we learned about in earlier.... Or government spending to stabilize the economy overall the Creative Commons through Flickr.com.Click to see the original works their... To influence the level of economic activity are as mechanical and surgical effectively as learned!