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INFLATIONARY EXPECTATIONS, AGGREGATE DEMAND DETERMINANT: One of several specific aggregate demand determinants assumed constant when the aggregate demand curve is constructed, and that shifts the aggregate demand curve when it changes. An increase in the inflationary expectations causes an increase (rightward shift) of the aggregate curve. A decrease in the inflationary expectations causes a decrease (leftward shift) of the aggregate curve. Other notable aggregate demand determinants include interest rates, federal deficit, and the money supply.

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Lesson 11: Circular Flow | Unit 5: Real World Page: 22 of 22

Topic: Government Spending <=PAGE BACK | PAGE NEXT=>

Government spending, purchases and transfer payments, is financed by indirect business taxes (IBT), Social Security taxes (SST), corporate profits taxes (CPT), personal taxes, and borrowing. Now Click

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TAXES

Legally mandated payments to government that are NOT made in exchange for a good or service. The primary reason government collects taxes is the revenue needed to pay for government expenditures, especially administrative expenses and the provision of public goods. Taxes are one of two methods of obtaining the revenue the government sector uses to pay for expenditures. The other is government borrowing.

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Today, you are likely to spend a great deal of time searching the newspaper want ads seeking to buy either a country wreathe or galvanized steel storage shelves. Be on the lookout for letters from the Internal Revenue Service.
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Cyrus McCormick not only invented the reaper for harvesting grain, he also invented the installment payment for selling his reaper.
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-- Hugh White, U.S. Senator

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