tailieunhanh - Lecture Issues in economics today - Chapter 11

After reading this chapter, you should be able to: Explain how the long run differs from the short run in pure competition; describe why profits encourage entry into a purely competitive industry and losses result in firms exiting the industry; explain how the entry and exit of firms affects resource flows and long-run profits and losses; explain the differences between constant-cost, increasing-cost, and decreasing-cost industries. | Chapter 11 Fiscal Policy Chapter Outline NONDISCRETIONARY AND DISCRETIONARY FISCAL POLICY USING FISCAL POLICY TO COUNTERACT “SHOCKS” EVALUATING FISCAL POLICY Fiscal Policy Fiscal Policy is the purposeful movement in government spending or tax policy designed to direct an economy Discretionary Fiscal Policy: government spending and tax changes enacted at the time of the problem to alter the economy Nondiscretionary Fiscal Policy: that set of policies that are built into the system to stabilize the economy How Nondiscretionary Fiscal Policy Works Nondiscretionary fiscal policy consists of policies that are built into the system so that an expansionary or contractionary stimulus can be given automatically. The welfare state and the progressive income tax serve as the built-in policies. If the economy is in recession, those who lose their jobs are granted unemployment and welfare benefits and they owe less in taxes. If the economy is growing at an unsustainable rate, people are making a . | Chapter 11 Fiscal Policy Chapter Outline NONDISCRETIONARY AND DISCRETIONARY FISCAL POLICY USING FISCAL POLICY TO COUNTERACT “SHOCKS” EVALUATING FISCAL POLICY Fiscal Policy Fiscal Policy is the purposeful movement in government spending or tax policy designed to direct an economy Discretionary Fiscal Policy: government spending and tax changes enacted at the time of the problem to alter the economy Nondiscretionary Fiscal Policy: that set of policies that are built into the system to stabilize the economy How Nondiscretionary Fiscal Policy Works Nondiscretionary fiscal policy consists of policies that are built into the system so that an expansionary or contractionary stimulus can be given automatically. The welfare state and the progressive income tax serve as the built-in policies. If the economy is in recession, those who lose their jobs are granted unemployment and welfare benefits and they owe less in taxes. If the economy is growing at an unsustainable rate, people are making a lot of money and are faced with higher tax rates and there are fewer people eligible for government benefits. How Discretionary Fiscal Policy Works If we are in a recession the fiscal policy to stimulate the economy would consist of Increases in government spending Decreases in taxes If we are in an inflationary period the fiscal policy to contract the economy would consist of Decreases in government spending Increases in taxes Expansionary Fiscal Policy AS AD RGDP PI RGDP* PI* AD’ RGDP’ PI’ Contractionary Fiscal Policy AS AD RGDP PI PI* RGDP* AD’ PI’ RGDP’ Shocks A Shock is any unanticipated economic event. Aggregate Demand Shock: an unexpected event which causes aggregate demand to increase or decrease, . the Sept 11, 2001 terrorist attacks. Aggregate Supply Shock: an unexpected event which causes aggregate supply to increase or decrease, . Iraq’s 1990 invasion of Kuwait and threat to Saudi Arabia. Nondiscretionary and Discretionary Fiscal Policy Combats a Recession AS PI RGDP .

• Kinh tế học
• Economic principles
• Economic policies
• Lecture Economics
• Pure competition
• Long run equilibrium
• Long run profits
• Principles of economics
• Lecture Principles of economics
• Aggregate demand
• Aggregate supply
• Short run economic fluctuations
• Economic fluctuations
• Market imperfections
• The international economy
• Economic growth
• Average labor productivity
• Short term economic fluctuations
• Symptoms of business cycles
• Lecture Microeconomics
• Economic problem
• Economic rent
• Economic profit
• Modern economic growth
• Growth accounting
• Economic immigrants
• Legal immigrants
• Demand shocks
• Loanable funds theory
• Lecture Macroeconomics
• Kinh tế vĩ mô
• Economic theory
• Economic perspective
• Marginal analysis
• Economic systems
• Market system
• The cost of production
• Economic costs
• economic
• management
• Principles of Microeconomics
• ten principles of economics
• tradeoffs
• rational
• Micro ECON 5
• Economic analysis
• Economic decision makers
• Cost in the firm
• Production in the short run
• Thinking like an economist
• Economic models
• Circular flow diagram
• Production possibilities frontier