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Keynesian economics advocates the use of automatic and discretionary countercyclical policies to lessen the impact of the business cycle. One example of an automatically countercyclical fiscal policy is progressive taxation. By taxing a larger proportion of income when the economy expands, a progressive tax tends to decrease demand when the ...
Business cycles are intervals of general expansion followed by recession in economic performance. The changes in economic activity that characterize business cycles have important implications for the welfare of the general population, government institutions, and private sector firms. There are many definitions of a business cycle.
'Sunspots' have been included in economic models as a way of capturing these 'extrinsic' fluctuations, in fields like asset pricing, financial crises, [3] [4] business cycles, economic growth, [5] and monetary policy. [6] Experimental economics researchers have demonstrated how sunspots could affect economic activity. [7]
Biden is basically in a game of chicken with the business cycle. One tolerable scenario for him would have been to get a mild recession over and done with in 2023, so a recovery would be well ...
The multiplier–accelerator model can be stated for a closed economy as follows: [3] First, the market-clearing level of economic activity is defined as that at which production exactly matches the total of government spending intentions, households' consumption intentions and firms' investing intentions.
Keynes dismissed the classical view that the economy must naturally return to equilibrium.Instead, he concluded that if an economic slowdown occurs, for whatever reason, the panic and gloom that it generates among firms and consumers seem to become self-fulfilling, leading to a prolonged period of low economic growth and unemployment.
The principle behind Obama administration's actions was referred to as trickle-up economics, [14] but the term bottom-up economics was also used for it. [15] On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act (ARRA), a $787 billion economic stimulus package aimed at helping the economy recover from the deepening worldwide recession. [16]
Real business-cycle theory (RBC theory) is a class of new classical macroeconomics models in which business-cycle fluctuations are accounted for by real, in contrast to nominal, shocks. [1] RBC theory sees business cycle fluctuations as the efficient response to exogenous changes in the real economic environment.