Classical Macroeconomicsmarket economy works wells, aggregate fluctuations ( govt cannot improve the efficiency of the market economy).
Monetarist Macroeconomicsfluctuations in the quantity of money generate the business cycle.
Multiplier ( depends on imports and income taxes both which make the multiper smaller)determine the change in equilibrium expenditure and real GDP that it generates. (autonomus, investment, govet expend).
Says Lawthat supply creates its own demand. you see Says law at work (full employment economy and the real wage rate adjusts).
Keynes Law ( creating the International Monetary Fund)effective demand- determines real GDP( if business spent less on new capital people save that amount).
Marginal tax ratefraction of a change in real GDP that is paid in income taxes- the change in tax payments divided by the change in real GDP.
MPC ( Marginal Proprensity to Consume)ignoring imports and income taxes, the magnitude of the multipler depends only on the MPC.
Business-Cycle Turning Pointswhen an expansion os triggered an increase in autonomous expenditure.
Expenditure Multiplierwhen autonomus expend changes equib expend changes by a larger amount (multiplier greater than 1 induced expenditure).
Consumption Functionrelationship between consumpttion and expenditure and disposable income, other things reamaining the same.
Disposable incomeis aggregate income-GDP-minus the net taxes. (net taxes are paid to the GOV).
Derive the AD curve from equilibrium expenditureAD curve is the relationship between the quantity of the real GDP demanded and the price level. all other influences on expend plans remain the same.
AD Curvethe quantity of rea GDP demanded on the AD curve is the equilibrium when aggregate planned.
Progressiveyou pay a large percentage rate % in taxes, (income taxes).
Regressivetaxes those that make less the those who make more. (make the poor pay more tax).
Proportionalflat tax rate.
Federal Budgetannual statement of tax revenues, outlays and surplus or deficit of the Govt.
Fiscal Policyfederal budget to achieve the macroeconomic objectives and sustained economic growth and full employment.
Fiscal Year01 Oct – Sept 30.
Fiscal Stimulusdesign to boost real GDP and create or save jobs.
Fiscal Policy and Aggregate Demanda number of different fiscal policy actions might be used in attempt to stimulate aggregate demand.
Automatic Fiscal policya fiscal policy actions that is triggered by the state of the economy.
Discretionary Fiscal Policyact of Congress.
Induced Taxestaxes that vary with real GDP.
Tax Multipliereffect change in taxes on the aggregate demand.
Tax Wagethe gap created by tax between what a buyer pays and what a seller receives.