Fiscal Policy. Taxing and spending decisions by government (Congress and President). I. Demand-Side Economics. Keynes: GD because neither producers nor consumers had incentive to spend enough to cause increase in production Washington Baby Sitter Co-op
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Taxing and spending decisions by government (Congress and President)
1/MPS or 1/(1-MPC)
Marginal Propensity to Save / Consume
Inelastic demand consumers pay most of tax (e.g. gas)
[+ inelastic supply
Elastic demand producers pay most of tax
Focus on Aggregate Supply and freeing up private sector to reduce costs and shift AS right
“Trickledown” vs. GHWB: “Voodoo Economics”
“Dynamic” vs. “Static” scoring
(you didn’t really expect nothing to ever go wrong did you Pollyana?)
it get the money?
It must borrow in the Loanable Funds Market.
What entities demand
money in the loanable
As the government
borrows money in
the loanable funds
causing interest rates
to go up.
Higher interest rates
crowd out private
would have occurred
at the lower interest