Transcript Fiscal Policy

CHAPTER 29
Fiscal Policy
PowerPoint® Slides
by Can Erbil
© 2005 Worth Publishers, all rights reserved
What you will learn in this chapter:
What fiscal policy is and why it is an important tool in managing
economic fluctuations
Which policies constitute an expansionary fiscal policy and
which constitute a contractionary fiscal policy
Why fiscal policy has a multiplier effect and how this effect is
influenced by automatic stabilizers
How to measure the government budget balance and how it is
affected by economic fluctuations
Why a large public debt may be a cause for concern
Why implicit liabilities of the government are also a cause for
concern
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Fiscal Policy: The Basics
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Sources of Tax Revenue in the
United States, 2004
4
Government Spending in the
United States, 2004
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The Government Budget and Total
Spending
Fiscal policy is the use of taxes, government transfers, or
government purchases of goods and services to shift the
aggregate demand curve.
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Expansionary and Contractionary Fiscal
Policy
Expansionary Fiscal Policy Can Close a Recessionary Gap
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Expansionary and Contractionary Fiscal
Policy
Contractionary Fiscal Policy Can Eliminate an Inflationary Gap
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The Multiplier Effect of an Increase in
Government Purchases of Goods and Services
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How Taxes Affect the Multiplier
Automatic Stabilizers
Discretionary Fiscal Policy
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Differences in the Effect of Expansionary Fiscal
Policies
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The Budget Balance as a Measure of Fiscal Policy
expansionary fiscal policies
contractionary fiscal policies
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The U.S. Federal Budget Deficit and the Business
Cycle
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The U.S. Federal Budget Deficit and the
Unemployment Rate
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The Actual Budget Deficit Versus the Cyclically
Adjusted Budget Deficit
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Government Debt as a Percentage of GDP
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U.S. Federal Deficit and the Federal Debt-GDP
Ratio since 1939
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Japanese Deficits and Debt
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The Implicit Liabilities of the U.S. Government
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The End of Chapter 29
coming attraction:
Chapter 30:
Money, Banking, and the
Federal Reserve System
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