Compléter
Fiscal Policy - Fill-in-the-Blank
1
potential
severity
fiscal
Keynes
correct
excessively
decade
In
the
long
-
run
,
the
economy
will
eventually
trend
back
to
output
.
Most
macroeconomists
believe
that
the
process
of
self
-
correction
typically
takes
a
or
more
.
John
Maynard
once
declared
,
"
In
the
long
-
run
we
are
all
dead
.
"
Economists
usually
interpret
Keynes
as
having
recommended
that
governments
not
wait
for
the
economy
to
itself
.
Many
economists
argue
that
the
government
should
use
policy
to
get
the
economy
back
to
potential
output
in
the
aftermath
of
a
shift
of
the
aggregate
demand
curve
.
Stabilization
policy
is
the
use
of
government
policy
to
reduce
the
of
recessions
and
rein
in
strong
expansions
.
2
predictable
deficits
informed
offset
growth
later
stability
unemployment
postive
A
policy
that
maintains
the
economy
at
its
original
equilibrium
is
desirable
because
the
temporary
fall
in
aggregate
output
is
associated
with
high
.
Price
is
generally
regarded
as
a
desirable
goal
,
so
preventing
deflation
is
a
good
thing
.
Policymakers
should
not
always
act
to
declines
in
aggregate
demand
.
Some
policy
measures
to
increase
aggregate
demand
,
especially
those
that
increase
budget
,
may
have
long
-
term
costs
in
terms
of
lower
long
-
run
.
In
the
real
world
,
policymakers
aren't
perfectly
,
and
the
effects
of
their
policies
aren't
perfectly
.
Policymakers
also
try
to
offset
shocks
to
aggregate
demand
.
Despite
more
output
and
lower
unemployment
,
the
short
-
run
gains
from
an
inflationary
gap
must
be
paid
back
.
3
inflation
counteract
unemployment
supply
In
contrast
to
the
case
of
a
demand
shock
,
there
are
no
easy
remedies
for
a
shock
.
There
are
no
government
policies
that
can
easily
the
changes
in
production
costs
that
shift
the
short
-
run
aggregate
supply
curve
.
If
the
government
acts
to
increase
aggregate
demand
and
limit
the
rise
in
unemployment
,
it
reduces
the
decline
in
output
but
causes
even
more
.
If
the
government
acts
to
reduce
aggregate
demand
,
it
curbs
inflation
but
causes
a
further
rise
in
.
Modern
governments
a
great
deal
of
money
and
collect
a
lot
in
.
5
federal
older
purchases
personal
65
Medicare
transfers
low
into
Social
Security
protect
out
corporate
Funds
flow
the
government
in
the
form
of
taxes
and
government
borrowing
.
Funds
flow
of
the
government
in
the
form
of
government
purchases
of
goods
and
services
and
government
transfers
to
households
.
In
the
United
States
,
taxes
are
collected
at
the
level
,
the
state
level
,
and
the
local
level
.
At
the
federal
level
,
the
main
taxes
are
income
taxes
on
both
income
and
profits
as
well
as
social
insurance
taxes
.
U
.
S
.
government
spending
takes
the
form
of
of
goods
and
services
and
.
Most
U
.
S
.
government
spending
on
transfer
payments
is
accounted
for
by
three
big
programs
:
,
,
and
Medicaid
.
Social
Security
provides
guaranteed
income
to
Americans
,
disabled
Americans
,
and
the
surviving
spouses
and
dependent
children
of
deceased
beneficiaries
.
Medicare
covers
much
of
the
cost
of
health
care
for
Americans
over
age
.
Medicaid
covers
much
of
the
cost
of
health
care
for
Americans
with
incomes
.
The
term
social
insurance
is
used
to
describe
government
programs
that
are
intended
to
families
against
economic
hardship
.
6
investment
directly
GDP
consumer
income
incentive
shift
income
=
C
+
I
+
G
+
(
X
-
M
)
The
government
controls
government
purchases
of
goods
and
services
(
G
)
.
Through
changes
in
taxes
and
transfers
,
the
government
also
influences
spending
(
C
)
and
,
in
some
cases
,
spending
(
I
)
.
Either
an
increase
in
taxes
or
a
decrease
in
government
transfers
reduces
disposable
,
leading
to
a
fall
in
consumer
spending
.
Either
a
decrease
in
taxes
or
an
increase
in
government
transfers
increases
disposable
,
leading
to
a
rise
in
consumer
spending
.
Changes
in
the
rules
that
determine
how
much
a
business
owes
can
increase
or
decrease
the
to
spend
on
investment
goods
.
Because
the
government
itself
is
one
source
of
spending
in
the
economy
,
and
because
taxes
and
transfers
can
affect
spending
by
consumers
and
firms
,
the
government
can
use
changes
in
taxes
of
government
spending
to
the
aggregate
demand
curve
.
7
Contractionary
increases
reduces
Expansionary
Fiscal
policy
that
aggregate
demand
is
called
expansionary
fiscal
policy
.
fiscal
policy
takes
the
form
of
an
increase
in
government
purchases
of
goods
and
services
,
a
cut
in
taxes
,
or
an
increase
in
government
transfers
.
Fiscal
policy
that
aggregate
demand
is
called
contractionary
fiscal
policy
.
fiscal
policy
takes
the
form
of
a
decrease
in
government
purchases
of
goods
and
services
,
an
increase
in
taxes
,
or
a
reduction
in
government
transfers
.
8
plan
stable
spend
recovered
worse
data
time
Many
economists
caution
against
an
extremely
active
stabilization
policy
,
arguing
that
a
government
that
tries
too
hard
to
stabilize
the
economy
through
fiscal
policy
can
end
up
making
the
economy
less
.
One
key
reason
for
caution
is
that
there
are
important
lags
in
the
use
of
fiscal
policy
.
It
takes
time
to
collect
and
analyze
economic
.
It
takes
months
to
develop
a
spending
.
It
takes
time
to
money
.
Because
of
time
lags
,
an
attempt
to
increase
spending
to
fight
a
recessionary
gap
may
take
so
long
to
get
going
that
the
economy
has
already
on
its
own
.
If
a
recessionary
gap
turns
into
an
inflationary
gap
by
the
time
a
fiscal
policy
takes
effect
,
the
fiscal
policy
will
make
things
instead
of
better
.
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Fill in the missing words in this quiz concerning the Anatomy page of the website. You should read through the passage provided, and click the word you think fits from the list at the side. If you ...