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EXPANSIONARY FISCAL POLICY

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A form of fiscal policy in which an increase in government purchases, a decrease in taxes, and/or an increase in transfer payments are used to correct the problems of a businesscycle contraction. The goal of expansionary fiscal policy is to close a recessionary gap, stimulate the economy, and decrease the unemployment rate. Expansionary fiscal policy is often supported by expansionary monetary policy. An alternative is contractionary fiscal policy. Expansionary fiscal policy is designed to stimulate the economy during or anticipation of a business-cycle contraction. This is accomplished by increasing aggregate expenditures and aggregate demand through an increase in government spending (both government purchases and transfer payments) or a decrease in taxes. Expansionary fiscal policy leads to a larger government budget deficit or a smaller budget surplus.

CONTRACTIONARY FISCAL POLICY:
A form of fiscal policy in which a decrease in government purchases, an increase in taxes, and/or a decrease in transfer payments are used to correct the inflationary problems of a business-cycle expansion. The goal of contractionary fiscal policy is to close an inflationary gap, restrain the economy, and decrease the inflation rate. Contractionary fiscal policy is often supported by contractionary monetary policy. An alternative is expansionary fiscal policy. Contractionary fiscal policy is designed to restrain the economy during or anticipation of an inflation-inducing business-cycle expansion. This is accomplished by decreasing aggregate expenditures and aggregate demand through a decrease in government spending (both government purchases and transfer payments) or an increase in taxes. Contractionary fiscal policy leads to a smaller government budget deficit or a largerbudget surplus. In general, contractionary fiscal policy works through the two sides of the government's fiscal budget -- spending and taxes. However, it's often useful to separate these two sides into three specific tools -- government purchases, taxes, and transfer payments.

CONTRACTIONARY MONETARY POLICY:
A form of monetary policy in which a decrease in the money supply and a increase in interest rates are used to correct the inflationary problems of a business-cycle expansion. In theory, contractionary monetary policy can include selling U.S. Treasury securities through open market operations, an increase in the discount rate, and an increase in reserve requirements. In theory, open market operations are the primary tool of contractionary monetary policy. Contractionary monetary policy is often supported by contractionary fiscal policy. An alternative is expansionary monetary policy. Contractionary monetary policy is a decrease in the quantity of money in circulation, with corresponding increases in interest rates, for the expressed purpose of putting the brakes on an overheated business-cycleexpansion and to address the problem of inflation. In days gone by, monetary policy was undertaken by decreasing the amount of papercurrency in circulation. In modern economies, monetary policy is undertaken by controlling the money creation process performed throughfractional-reserve banking.

In theory. monetary policy is undertaken by controlling the money creation process performed through fractional-reserve banking.EXPANSIONARY MONETARY POLICY: A form of monetary policy in which an increase in the money supply and a reduction in interest rates are used to correct the problems of a business-cycle contraction. In modern economies. In theory. An alternative is contractionary monetary policy. In days gone by. monetary policy was undertaken by printing more papercurrency. a decrease in the discount rate. open market operations are the primary tool of expansionary monetary policy. Treasury securities through open market operations. expansionary monetary policy can include buying U. for the expressed purpose of stimulating the economy to correct or prevent a business-cycle contraction and to address the problem of unemployment. Expansionary monetary policy is an increase in the quantity of money in circulation.S. with corresponding reductions in interest rates. Expansionary monetary policy is often supported by expansionary fiscal policy. and a decrease in reserve requirements. .

Equipment $6200. Cash in hand $195 You are not given the Capital amount at that5 date During the first week of December 2009 a) Hill brought extra equipment on credit for $110 b) Hill bought extra inventory by cheque $380 c) Hill paid creditors by cheque $1150 d) Debtors paid hill $640 by cheque and $90by cash e) Hill put an extra $1500 into the business $1300 by cheque and $200 in cash Required: You are to draw up a balance sheet on December 7.J. Cash at bank $ 9100. Hill has the following assets and liabilities as on November 30. Accounts Receivable $4050. Car$7300. 2009 after the above transactions have been completed . 2009: Accounts Payable $2800. Inventory $8100.

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