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FISCAL POLICY: Use of the federal government's powers of spending and taxation to stabilize the business cycle. If the economy is mired in a recession, then the appropriate fiscal policy is to increase spending or reduce taxes--termed expansionary policy. During periods of high inflation, the opposite actions are needed--contractionary policy. The consequences of fiscal policy are typically observed in terms of the federal deficit.

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MONEY MULTIPLIER: The magnified change in money, both checkable deposits and currency, resulting from a change in bank reserves. Compared to the simple deposit multiplier, the money multiplier builds on the inverse of the required-reserves ratio, but also takes into consideration that banks keep excess reserves, and the public transfers some checkable deposits into cash and savings.

     See also | money | checkable deposits | currency | bank reserves | excess reserves | deposit multiplier |


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MONEY MULTIPLIER, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2019. [Accessed: August 17, 2019].


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U-SHAPED COST CURVES

The family of short-run cost curves consisting of average total cost, average variable cost, and marginal cost, all of which have U-shapes. Each is U-shaped because it begins with relatively high but falling cost for small quantities of output, reaches a minimum value, then has rising cost at large quantities of output. Although the average fixed cost curve is not U-shaped, it is occasionally included with the other three just for sake of completeness.

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