by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is a Standardized Employment Budget?The standardized employment budget is the budget deficit or excess for any given period modified to reflect what the business would generate if it were functioning at potential GDP.Every year, the Congressional Budget Office...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the National Debt?Another useful way to view the budget deficit is through the prism of accumulated debt rather than annual deficits. The national debt refers to the total amount that the government has borrowed over time. In contrast, the budget deficit...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Contractionary Fiscal Policy?Fiscal policy can also contribute to pushing aggregate demand beyond potential GDP in a way that leads to inflation.The graph below shows, a very large budget deficit pushes up aggregate demand, so that the intersection of...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Automatic Stabilizers?Changes in tax and spending levels can also occur automatically, due to automatic stabilizers, such as unemployment insurance and food stamps, which are programs that are already laws that stimulate aggregate demand in a recession and...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Discretionary Fiscal Policy? Discretionary fiscal policy concerns government taxation and spending that is not tied to mandatory payments or entitlements and is done to affect aggregate demand in the economy. Keynesian economists believe that government...
