TAILIEUCHUNG - Lecture Essentials of Economics: Chapter 16 - Bradley R. Schiller, Cynthia Hill

Chapter 16 "Theory and reality", after reading this chapter, you should be able to: Identify the major tools of macro policy, explain how macro tools can fix macro problems, depict the track record of macro outcomes, describe major impediments to policy success, discuss the pros and cons of discretionary policy. | Chapter 16 Theory and Reality Macroeconomics: Policy Tools Policy tools for macroeconomics: Fiscal policy. Monetary policy. Supply-side policy. 16- Table 16- This is a quick summary of the tools for each policy. Fiscal Policy Fiscal policy is the use of government taxes and spending to alter macroeconomic outcomes, consisting of: Automatic stabilizers. Discretionary policy. 16- Fiscal policy deals with changes in government spending or taxes to stabilize the economy. Automatic Stabilizers Automatic stabilizers are federal expenditure or revenue items that automatically respond counter-cyclically to changes in national income. Such stabilizers don’t require an additional act of Congress. Examples include unemployment benefits and income tax collections. 16- Automatic stabilizers help smooth out the economy “automatically”, without action by anyone. Examples include unemployment benefits and income taxes. Such stabilizers don’t require an additional act of Congress. These actions “kick in” at the start of a recession, and automatically: Reduce tax revenues. Increase government outlays. Widen budget deficits. They counteract the shifting of AD to the left and help stabilize the economy. Automatic Stabilizers 16- When the economy slows, recessions automatically reduce tax revenues, increase government outlays, and widen budget deficits. These things happen naturally, resulting in deficit spending, which can stimulate the economy. Discretionary Policy Discretionary policy refers to deliberate changes in tax or spending legislation. Additional spending and tax revenue decreases can increase the federal budget deficit. Reduced spending and tax revenue increases can decrease the deficit. 16- Discretionary means that an action is deliberate or intentional. An example is a tax cut passed by Congress. Monetary Policy Monetary policy: the use of money and credit controls to influence macroeconomic activity. The tools of .

• Kinh tế học
• Essentials of Economics
• Lecture Essentials of Economics
• Policy tools
• Fiscal policy
• Automatic stabilizers
• Discretionary policy
• International economics
• Product markets
• Economic perspective
• Marginal analysis
• Inverse relationships
• Independent variables
• Market system
• Circular flow
• Market equilibrium
• Law of demand
• Exchange rates
• Preset prices
• Price elasticity of demand
• Elasticity of demand
• Market failures
• Public goods
• Business population
• Corporation advantages
• Pure competition
• Market models
• Pure monopoly
• Monopoly demand
• Monopolistic competition
• Game theory overview
• Economic growth
• Gross domestic product
• Business cycles
• Economic cost of unemployment
• Aggregate demand
• Aggregate supply
• Evaluating fiscal policy
• Financial institutions
• Federal Reserve
• Interest rates
• Monetary policy
• International trade
• Wage determination
• Labor demand
• Income inequality
• Poverty trends
• Opportunity cost
• Rational action
• Factors of production
• Optimal Mix
• Investment goods
• Government services
• Product market
• Locating markets
• Individual demand
• Market supply
• Consumer demand
• Sociopsychiatric explanation
• Total utility
• Marginal utility
• Supply decisions
• Marginal physical product
• Total profit