Ch. 12 Reading Guide: Fiscal Policy

Due Tuesday:


1.  Create a chart organizing Expansionary Fiscal Policy and Contractionary Fiscal Policy.  Be sure to include as column headings: economic problems necessitating each policy, how taxes should be changed to implement the policy, how G. spending should be changed to implement the policy, the effects of the policy on GDP, effects of the policy on inflation rate, effects of the policy on unemployment rate, effects of the policy on federal deficit/surplus, effects of the policy on national debt.


If you have trouble completing this assignment come in before school to discuss.










Due Thursday:


1.  Explain the contrast between discretionary and automatic fiscal policy.




2.  Completely explain each of the three automatic stabilizers of fiscal policy and describe how each would work in and inflationary AND recessionary situation.




3.  Fully explain each of the "drawback" of fiscal policy.  These include:
a.  Political considerations
b.  Timing lags
c.  The Crowding Out Effect
d.  The Net Export Effect