100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
Summary Economics, ISBN: 9781259921971, McConnel, Brue & Flynn (Chapters 33, 36, 40 & 41) 3 $5.94
Add to cart
Quickly navigate to
Preview
  2.  
  3. Hogeschool Rotterdam (HR)
  4.  
  5. Economics

Summary

Summary Economics, ISBN: 9781259921971, McConnel, Brue & Flynn (Chapters 33, 36, 40 & 41) 3
 0 purchase
  • Course
  • Economics
  • Institution
  • Hogeschool Rotterdam (HR)
  • Book
  • ISE Economics

This summary includes the theory of Chapters 33, 36, 40 and 41. And , it includes some of the PowerPoint info that were given in the lectures during my year.

Preview 3 out of 30  pages

Document information

  • No
  • Chapters 33, 36, 40, 41
  • September 15, 2022
  • 30
  • 2020/2021
  • Summary

Subjects

  • fiscal policy
  • deficits
  • debt
  • interest rates
  • exchange rates
  • the balance of payments
  • flexible exchange rates
  • fixed exchange rates
  • comparative advantage
  • terms of trade
  • gains from trade
  • expansionary and contractionary fiscal policy
  • trade with increasing costs

Connected book

book image

Book Title:

Author(s):

  • Edition:
  • ISBN:
  • Edition:

Written for

  • Hogeschool Rotterdam (HR)
  • International Business and Management Studies
  • Economics
All documents for this subject (12)

Seller

avatar-seller
jizelleys

Content preview

Tools for International Business - summaries



Economics (IBA)
Summary
Year 2 Block 1
Book: Economics (McGraw Hill
Education), 21st edition, McConnell,
Brue & Flynn




Chapters: 33, 36, 40-41.




1

,Tools for International Business - summaries


Chapter 33 – Fiscal policy, deficits, and debt
Fiscal policy: consists of deliberate changes in government spending and tax collections
designed to achieve full employment, control inflation, and encourage economic growth; these
changes at the option of the federal government. Two types:
(1) Expansionary Fiscal Policy – happens when recession occurs: government spending
increases, tax reductions, or both, designed to increase aggregate demand and raise
real GDP.
- Budget deficit: government spending in excess of tax revenues.

(2) Contractionary Fiscal Policy – happens when demand-pull inflation occurs:
government spending reductions, tax increases, or both, designed to decrease
aggregate demand and therefore lower or eliminate inflation.
- Budget surplus: tax revenues in excess of government spending.
Taxes reduce spending and aggregate demand. Reduction in spending are desirable when the
economy is moving toward inflation, whereas increases in spending are desirable when the
economy is slumping.
Problems of Fiscal Policy:
- Recognition lag: the time between the beginning of recession or inflation and the
certain awareness that it is actually happening.
- Administrative lag: a significant lag between the time the need for fiscal action is
recognized and the time action is taken; the wheels of democratic government turn
slowly.
- Operational lag: a lag between the time fiscal action is taken and the time that action
affects output, employment, or the price level.
- Political business cycles; swings in overall economic activity and real GDP resulting
from election-motivated fiscal policy, rather than from inherent instability in the private
sector.
- Future policy reversals: policy may fail to achieve its intended objectives if household
expect future reversal of policy.
- Crowding-out effect: an expansionary fiscal policy may increase the interest rate and
reduce investment spending, thereby weakening or cancelling the stimulus of the
expansionary policy.
Public debt: the accumulation of all past federal deficits and surpluses. The deficits have greatly
exceeded the surpluses and have emerged mainly from war financing, recessions, and fiscal
policy.
Government securities: financial instruments issued by the federal government to borrow money
to finance expenditures that exceed tax revenues. There are four types:
1. Treasury bills (short-term securities)
2. Treasury notes (medium-term securities)
3. Treasury bonds (long-term securities)
4. Savings bonds (long-term, nonmarketable securities)



2

, Tools for International Business - summaries


The federal government is in no danger of going bankrupt because it needs only to refinance
(not retire) the public debt and it can raise revenues, if needed, through higher taxes.


PowerPoint (lecture) Chapter 33




Discretionary fiscal policy refers to the deliberate manipulation of taxes and government
spending by Congress to alter real domestic output and employment, control inflation, and
stimulate economic growth. ‘’Discretionary’’ means the changes are at the option of the
federal government.




Expansionary policy - Use during a recession:
 Increase government spending
 Decrease taxes
 Combination of both
 Create a deficit




3

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller jizelleys. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $5.94. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

68175 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling
$5.94
  • (0)
Add to cart
Added