Transcript Warm-Up - Cloudfront.net

Warm Up: True or False
(If FALSE, make it into a true statement by changing the word(s) in yellow)
1. To correct an inflationary problem in
the U.S., the AD curve needs to shift to
the __________.
2. Using an expansionary fiscal policy
results in interest rates _________.
3. Supporters of fiscal policy believe that
inflation can be reduced by __________
________________.
4. Keynes believed that spending money
was the key to controlling the economy
during a _____________.
5. Full employment implies that
unemployment is ________________.
Warm-Up
1)What are the 3 macro goals of the U.S. economy?
2) What problems may result from too much inflati
3) What problems may result from a recession
Two Major Problems That Can Occur in Our
Economy
[extremes of the __________________):
• __________/__________:
- Low GDP/high unemployment
• __________:
- Prices increasing too quickly
HOW DO YOU FIX THEM???
____________
Definition:
• Fiscal Policy can be defined as what
the government does with
_________ or __________
___________ to stabilize the
economy during periods of
recession or inflation.
• What the ____ __________ does to
try and ___________ ____
___________.
What are the 2 tools of fiscal Policy?
1) ________________
2) ________________
Three Possible Results of Fiscal Policy:
1. _______ ________: government
spending _________ than tax
revenue
2. _______ _________: government
spending is ______ than tax revenue
3. _________ _______: government
spending __________ to tax revenue
Create a Tree Map
Three Possible
Results of
Fiscal Policy
How Fiscal Policy Started…
• Before the Great Depression, the
U.S. adopted a policy of
_________-______. (___
_____________ _____________)
• But with the economy in such an
economic crisis during the
________, citizens cried out for the
gov’t to take ________ and play a
more _______ role in the
___________
Why do you think citizens
wanted the government to
become more “ACTIVE”?
________________________
________________________
________________________
________________________
John Maynard Keynes
• He was __________ economic guru during
the ________ ___________.
• He advised the president that the only way to
bring the economy out of a __________ was
for the __________ to play a more ______
role in the economy (______ ________).
• Therefore, Keynes is noted for being the
________ ___ _________ _________.
• Fiscal Policy greatly __________ the role of
the government in the ________ _______.
In what way is Keynes’ advice
to FDR different from the
policy of laissez-faire?
________________________
________________________
________________________
________________________
Problem:
___________/___________
• SOLUTION:
– The government pursues an
_____________ fiscal policy:
• ___________ government spending
• ___________ taxes
• The intention is to _________ GDP and
_________ unemployment
=___________________
How does increasing government
spending and/or lowering taxes help
fight the problem of a recession???
________________________
________________________
________________________
________________________
Problem:
___________/___________
• SOLUTION:
– The government pursues an
_____________ fiscal policy:
• ___________ government spending
• ___________ taxes
• The intention is to _________ GDP and
_________ unemployment
=___________________
How does decreasing government
spending and/or increasing taxes help
to fight the problem of inflation???
________________________
________________________
________________________
________________________
Wrap-Up
1.
What are the 2 extremes of the business cycle?
2. What type of fiscal policy should be pursued to
fight a recession?
3. What type of fiscal policy should be pursued to
fight inflation?
4. Who’s the founder of Fiscal Policy?
5. What does laissez-faire mean?