Compléter
Fiscal Policy - Fill-in-the-Blank
1
correct
severity
Keynes
fiscal
excessively
potential
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
unemployment
informed
stability
postive
later
growth
offset
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
supply
inflation
unemployment
counteract
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
low
out
Medicare
purchases
protect
federal
corporate
into
older
Security
transfers
65
personal
Social
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
shift
income
income
GDP
consumer
incentive
directly
=
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
Expansionary
Contractionary
increases
reduces
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
stable
data
worse
plan
spend
recovered
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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