Glossary Category: Macroeconomy - Page 8 - 3auk

contractionary fiscal policy

Contractionary fiscal policy involves measures to slow economic activity and combat inflation, primarily through reducing government spending and/or

Direct taxes are levies imposed directly on individuals and organizations according to their income, wealth, or property. Examples

Full employment refers to the level of employment in an economy where it operates at its potential output,

Negative consequences of inflation Reduced purchasing power: Inflation erodes the real value of money, so each unit of

Cost-push inflation occurs when rising production costs force firms to increase prices to protect their profit margins. Rising

Demand-pull inflation occurs when aggregate demand (total spending in the economy) rises faster than aggregate supply, typically when

Demand-pull inflation arises when aggregate demand expands faster than aggregate supply, particularly when the economy is operating near

The nominal value refers to the monetary value of goods, services, assets, or income measured in current prices

The real value of money or an economic variable refers to its value adjusted for inflation, which measures

Disinflation refers to a decrease in the rate of inflation within an economy over a specific period. For