OVERVIEW: WEEK OF DECEMBER 2nd
Topic
This week, we begin our discussion of policies aimed at moving the economy back to long-run equilibrium. In particular, we will focus on the government's role in prescribing policy through changes in government spending and/or taxes. This is called fiscal policy.
You will be introduced to such terms as fiscal budget, deficit and surplus. In addition, you will differentiate between discretionary and automatic fiscal policy.
Discretionary fiscal policy, the focal point of our discussions has been and continues to be a very controversial policy simply because of what it involves. Currently, the administration has been mulling over legislative actions that has and will continue to put into law discretionary fiscal policy. Although their actions could not be any more timely, such policies aimed to help rescue the economy also tend to polarize the nation's citizens due to whom it is meant to benefit............as you can gather from the cartoon.
In chapter 17, you will revisit the concepts of the marginal propensity to consume as well as the multiplier. If you've forgotten these, review Appendix B. Make sure that you understand the difference between a government deficit and government debt. They are absolutely NOT the same thing.
Objectives
By the end of this week, you will be able to:
- Differentiate between debt and deficit
- Identify net federal debt versus gross federal debt
- Describe fiscal policy.
- Differentiate between automatic and discretionary fiscal policy.
- Differentiate between contractionary and expansionary fiscal policy.
- Using fiscal policy, identify a course of action in the case of a business cycle downturn.
- Describe supply-side economics
Weekly Schedule
| Due date | Activity |
|---|---|
| Reading: Textbook Chapter 17 |
|
| Relevant Study Guide Questions | |
| Due: 12/8 | Quiz #10 |