Chapter 21 - The Influence of Monetary and Fiscal Policy on Aggregate Demand

________ alters the money supply primarily by changing the quantity of reserves in the banking system through the purchase and sale of government bonds in open- market operations.

The use of policy instruments to stabilize ________ and, as a result, production and employment.

________- the setting of the level of government spending and taxation by government policymakers.

When the government cuts ________ taxes, it increases households take- home pay.

________- changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policymakers having to take any deliberate action.

The ________ demanded exactly balances the ________ supplied.

________- 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 reduce.

The government can adjust its monetary and ________ in response to those waves of optimism and pessimism.

It shifts the ________ curve indirectly by influencing the spreading decisions of firms and households.