Macroeconomics

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

EX

the offset in aggregate demand that results when expansionary fiscal policy raises the interest rate and thereby reduces investment spending

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

Keynes's theory that the interest rate adjusts to bring money supply and money demand into balance

equalibrium

Fraction of incomes that that households consume rather than save.

MPC = (Change in Cosumption C)/(Dispoasal income DI)

MPS = (Change in Saving S)/(Dispoasal income DI)

MPC = MPC x Rise income

MPC = 0.8 x 100 = 80

SSM= 1/1-MPC

SSM effect = (1/1-MPC) x (Change in NX)