Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
fiscal policy multiplier effect crowding out Ricardian equivalence automatic stabilizers | the theory according to which people understand that, for a given level of government spending, lower taxes today mean higher taxes in the future and therefore save the money from a tax cut to pay future taxes. changes in fiscal policy that stimulate AD in a recession without the need for explicit action by policymakers; unemployment insurance is one example of an automatic stabilizer. the decrease in private consumption and investment that occurs when government borrows more; also, the decrease in private spending that occurs when government increases spending. federal government policy on taxes, spending, and borrowing that is designed to influence business fluctuations. the additional increase in aggregate demand caused when expansionary fiscal policy increases income and thus increases consumption and investment spending. |