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1. Contractionary fiscal policy 2. 3600 3. Decrease or decreases 4. Expansionary fiscal policy 5. Crowding out a. greater 7. law 8. left 9. increase/increases 1o. surplus 11. Discretionary fiscal policy 12. right 13. Social security 14. income tax 15. Transfer payments 15. Fiscal policy 17. Payroll 1a. multiplier 19. Property tax 20. Automatic stabilizer 21. Sales tax 22. less A' I is the provision of aid or money to an individual who is no! required to pmvide anything in exchange. ' 'and welfare benefits are examples of transfer payments. is... l Transfer payments i las the economy enters an expansionary phase when incomes and employment rise. During recessions, transfer paymenls' ' as incomes fall and people lose jobs. The Composition of Federal, State and Local Revenues Federal receipts come primarily from Itaxes and personal taxes. State and local tax receipts come from a variety of sources; the most important are ' tax: A budget surplus occurs if government revenues are' ' than expenditures. A budget decit occurs if government revenue i 'than expend iture. If the budget surplus equals ',we say the government has a balanced budget. The national debt is the sum of all past federal deficits, minus any i when there is a budget surplus, the national debt' i and when there is a budget deficit it i '. s the use of government expenditures and taxes to inuence the level of economic activity. Any government program that tends to reduce fluctuations in GDP automatically is called an i i. l l is the deliberate government effort to stabilize the economy through fiscal policy choices. ' i might consist of an increase in government purchases or transfer payments, a reduction in taxes, or a combination of these tools. Ai I might involve a reduction in government purchases or transfer payments, an increase in taxes, or a mix of all three to shift the aggregate demand curve to the left. The government could seek to shift the aggregate demand curve by an increase in government purchases, this will shift the aggregate demand curve to the i i by an amount equal to the initial change in govern merit purchases times the The effect ofan increase in government purchases of $200 billion when the multiplier is 2 is that the total quantity of goods and services will increase byi '. A reduction in government purchases would shift the aggregate demand curve to the by an amount equal to the initial change in government purchases times the i max