Fiscal Policy.notebook January 14, 2016 Warm Up: Fiscal Policy: - PDF document

Fiscal Policy.notebook January 14, 2016 Warm Up: Fiscal Policy: Socrative Fiscal Policy Pre-Quiz the use of government spending and revenue collection to influence the economy Code: 880cce2d Who can do this? What are the two tools they can use? Mar 5­10:11 PM Feb 10­12:48 PM Problem: Inflation Problem: Recession Fiscal Policy is made by _______________________ and _______________________ in order to ________________________________________________ Your Tools: Government Your Tools: Government spending and taxation spending and taxation When the economy needs to "cool off" When the economy needs a "boost" (Contractionary Fiscal Policy) (Expansionary Fiscal Policy) Goal: Reduce price level Goal: Expansion The president and Congress will... The president and congress will ... HOW WILL YOU FIX THE ____________ taxes HOW WILL YOU FIX THE ________________ taxes ECONOMY? ECONOMY? ____________ spending ________________ spending Mar 6­12:27 PM Feb 23­4:09 PM Warm Up: To Boost the Economy... To "Cool Off" the Economy.. The president and Congress will The President and Congress Will ­ Cut Taxes ­ Raise Taxes ­ Increase Spending ­Cut Spending Interpret shift! Show shift! Impact: PL AS PL AS Impact: - Real GDP _________ Real GDP______ Business Cycle _______ -_____________ - Unemployment _____ -Unemployment ___ PL1 PL1 -Price Level Price Level AD AD R1 Real GDP R1 Real GDP Feb 23­4:38 PM Feb 23­4:42 PM 1

Fiscal Policy.notebook January 14, 2016 Socrative Exit Ticket! Feb 15­8:26 AM Mar 5­10:13 PM Warm Up: Warm Up: 1. Who makes fiscal policy? Take out your sheet from yesterday. Begin working on the BACK side. 2. What are the tools of fiscal policy? 3. What are the ultimate goals of fiscal policy? 4. How might government use the tools of fiscal policy to correct a recession? Mar 6­10:56 AM Mar 6­4:36 PM Presidential Nomination Address, 1932, by Franklin Delano Annual Message to Congress on the State of the Union, Roosevelt December 1930, by Herbert Hoover "When ­­ not ­if­­ we get the chance, the Federal Government will "Economic depression cannot be cured by legislative action or assume bold leadership in distress relief. For years Washington has executive pronouncement. Economic wounds must be healed by the alternated between putting its head in the sand and saying there is no action of the cells of the economic body­­the producers and consumers large number of destitute people in our midst who need food and themselves. Recovery can be expedited and its effects clothing, and then saying the States should take care of them, if there mitigated by cooperative action. That cooperation requires that are. Instead of planning two and a half years ago, they kept putting it every individual should...maintain his self­reliance; that each and every off from day to day, week to week, and month to month, until the one should search for methods of improving his business or conscience of America demanded action. I say that while primary service...that each should seek to assist his neighbors who may be responsibility for relief rests with localities now, as ever, yet the Federal less fortunate; that each industry should assist its own employees; that Government has always had and still has a continuing responsibility for each community and each State should assume its full responsibilities the broader public welfare." for organization of employment and relief of distress..." Feb 10­10:06 AM Feb 10­10:06 AM 2

Fiscal Policy.notebook January 14, 2016 Where were Roosevelt's ideas coming from? 1. Hoover's plan for economic recovery: 2. Roosevelt's plan for economic recovery: 3. Main Idea Sentence: While Hoover believed that _____________________________________ Roosevelt felt that _____________________________________. Feb 10­10:13 AM Feb 10­10:06 AM Criticisms of Keynesian Economics So...Keynes thinks the government should play a role in the economy, basing his ideas on: GDP = AD = C+I+G+NX What are some problems with this plan? Feb 10­12:46 PM Feb 10­4:40 PM Closing: Deck the Halls with Macro Follies Edmodo Exit Ticket­ List three short­comings of using fiscal policy to influence the economy. Feb 15­8:23 AM Feb 10­4:27 PM 3

Fiscal Policy.notebook January 14, 2016 Student Activity: Diagram Requirements: 1. Identify the problem. E­groups: You will diagram the overall process of expansionary fiscal policy. 2. What will you do to fiscal policy tools? 3. Provide a step-by-step analysis of HOW this policy works toward Economic C­groups: You will diagram the overall Growth, Price Stability, and Fiscal Policy. process of contractionary fiscal policy. Mar 6­10:57 AM Mar 6­10:59 AM Step 3: Step 1: Step 2: Describe impact on Draw Describe impact ___ Taxes AD=C+I+G+NX on incomes ___ Govt Model What are people Spending going to do? Interpet What does Goals: change in PL, this mean in Economic GDP and terms of the Growth, Price Unemp. health of the Stability, Full economy? Employment Mar 6­11:01 AM Feb 18­2:57 PM 4