Fiscal Austerity Is Expansionary Fiscal Measures, Such as Increases in Government

question 27

True/False

Fiscal austerity is expansionary fiscal measures, such as increases in government spending and decreases in taxes, designed to reduce unemployment.

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Definitions:

Money Multiplier

A concept that describes the amount of money that banks can generate with each dollar of reserves.

Percent

A mathematical term describing one hundredth of a particular quantity; a unit of proportion or rate expressed as a fraction of 100.

Reserves

Funds or assets that banks must hold either in their own vaults or on deposit with a central bank, to meet expected withdrawal demands or regulatory requirements.

Reserve Requirement

A regulation that sets the minimum fraction of customer deposits and notes that each bank must hold as reserves, rather than loaning out or investing.