Macro Vocab Ch. 16
Theory of Liquidity Preference
Keynes's theory that the interest rate adjusts to bring money supply and money demand into balance.
the setting of the level of government spending and taxation by government policymakers.
the additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases consumer spending.
the offset in aggregate demand that results when expansionary fiscal policy raises the interest rate and thereby reduces investment spending.
changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policy markers having to take any deliberate action.