Expansionary Fiscal Policy –

Increases in government expenditures and/or decreases in taxes to achieve particular economic goals.

Contractionary Fiscal Policy –

Decreases in government expenditures and/or increases in taxes to achieve particular economic goals.

Discretionary Fiscal Policy-

Deliberate changes of government expenditures and/or taxes to achieve particular economic goals.

Automatic Fiscal Policy –

Changes in government expenditures and/or taxes that occur automatically without (additional) congressional action.

Fiscal Policy

Week 9. Question 1.

a. There is a decrease in households’ wealth due to a decline in the stock market .

b. The government lowers taxes, leaving households with more disposable income, with no corresponding reduction in government purchases

W9 Assignment. Q1a.

a. There is a decrease in households’ wealth due to a decline in the stock market.