Transcript Maryland Senator Bill Ferguson 46th District

•Fiscal
Policy and Economics
Missy LaCroix
Annie Caldwell
 TWBAT
review the correlation
between the Core Learning
Goals and the H.S.A. for the
Fiscal Policy topics in the
Public Policy Unit.
 TWBAT
determine best
practices for teaching fiscal
policy topic from the Public
Policy Unit.

Welcome and Introductions

Inflation Motivation Activity

Review of Fiscal Policy Topics Covered on the H.S.A.

Indicator Overview

Business Cycle Indicator Overview

Business Cycle and Mocha Activity

Fiscal Policy and Indicator Overview

Fiscal Policy and Indicator Scenario Activity

Helpful Resources for Teaching Economics

Session Debrief

Questions/Reflections and Evaluation
The Scenario:
We live in the “Land of the Hungry”. This
year our GDP was a box of candy. In our
mixed market economy, we auction off
our products. Each of you for the last
year has earned $1.
 Since
everyone did not have enough to
buy soda we are raising your income
from $1 to $5!!!
 In
year 2 income increased to 5 times
what it was in year 1, however GDP
(candy) stayed the same.
• What happened to price?
• Were people better off?
 Since
people are still unable to buy
products, income is increasing again
from $5 to $10.
 What
 Was
 Did
happened to price?
the population better off?
more inflation occur?
 Why?



Money gets its real value from its purchasing power or what it can
buy. The health of the economy is measured not by how much
people earn, but by how much their money buys. The different
kinds and amount of goods and services your money lets you buy
is called your standard of living.
You as a person want to earn as much money as you can. The
national economy can actually have too much money. When the
amount of money grows faster than the speed goods and services
are produced the result is inflation. In the activity we just did the
candy or soda represented the goods and services you were able
to buy. By the third round it took more money to buy the same
amount as you bought in the first round.
So how can inflation affect you? Say you want a new pair of jeans,
for examples. Last year, they cost $20, but this year the same pair
costs $23. If the prices of most other goods have also risen, then
you are probably dealing with inflation. There is too much money
in circulation. Prices have inflated and your $20 buys less than it
did. People have to earn more money just to stay even.

4.0 CONTENT STANDARD: ECONOMICS –
Students will develop economic reasoning to
understand the historical development and
current status of economic principles,
institutions, and processes needed to be effective
citizens, consumers, and workers participating
in local communities, the nation, and the world.

CLG Expectation 4.1 - The student will demonstrate
an understanding of economic principles,
institutions, and processes required to formulate
government policy.
Government H.S.A.
B. Economic Systems and the Role of Government in the Economy
3. The student will evaluate the effectiveness of current monetary and fiscal policy on
promoting full employment, price stability, and economic performance (4.1.4).
Assessment Limits:
 Business cycle, monetary policy (Federal Reserve actions) and fiscal policy (Legislative
and Executive actions) and their effect on economic performance, full employment, and
price stability.
 Tools of monetary policy (Federal Reserve System – FED) include the reserve
requirement, interest rates, and open-market operations (buying and selling of
government securities).
 Tools of fiscal policy include increasing/decreasing taxes and tariffs and/or spending
 Measures of economic performance include Gross Domestic Product (GDP), Consumer
Price Index (CPI), and the unemployment rate.
A.
Describe the role of the United States Congress and the Maryland General Assembly in developing fiscal
policy and the approval of budgets
B.
Describe how national, state, and local legislative bodies use taxing and spending to influence the economy
C.
Evaluate the effectiveness of fiscal policy in achieving economic growth and employment, such as tax
incentives and changes in spending (Unit 3)
D.
Analyze the role of the executive on the national, state and local level in the budgetary process
E.
Determine how the executive branch influences economic performance by using the tools of fiscal policy
including increasing and decreasing taxes and tariffs and/or spending (Unit 4)
F.
Describe how the Federal Reserve System uses the three tools of monetary policy, including open market
operations, changes in the discount (interest) rate and changes in the reserve requirements to influence the
economy
G.
Describe the effectiveness of monetary policy in achieving economic growth, full employment and price
stability
H.
Explain how the Consumer Price Index (CPI), the unemployment rate and the Gross Domestic Product
(GDP) measure economic performance
I.
Explain how economic instability, including periods of growth and recession, is a part of the free enterprise
system
J.
Explain how inflation reduces buying power and may contribute to a slow down in the economy (Unit 6)
 4.1.4h
- Explain how the Consumer Price
Index (CPI), the unemployment rate and the
Gross Domestic Product (GDP) measure
economic performance
Economic Indicator
Definition
Gross Domestic Product
(GDP)
The amount of goods and services
produced in the in one year
Inflation/
Consumer Price Index
(CPI)
Inflation: A rise in prices
CPI: The average price for a good
or service
Retail Sales
The amount of goods and services
sold by retail stores
Unemployment Rate The amount of people who want to
work but can’t find a job
 4.1.4i
- Explain how economic instability,
including periods of growth and recession, is a
part of the free enterprise system
A period of economic growth as
measured by a rise in GDP. More jobs
are created and business prospers.
There are larger incomes, increased
spending and investment, and higher
profits. Consumers go into debt to
acquire big-ticket items, like new
cars, appliances, and other durable
goods.
When the GDP stops rising, the economy has reached its
peak - the height of an economic expansion. Labor is in
short supply because factories are at full production.
The banking system has become fully loaned up and
interest rates on loans increase, making it harder to get
credit. Consumers reach their limit and their demand
for goods decrease. Factory output slows as consumer
demand cools off.
After reaching its peak, the
economy enters a period of
contraction, an economic
decline marked by falling
GDP. Unemployment
usually increases.
Consumer confidence in the
economy weakens.
Unemployment begins to
rise as factories begin to lay
off workers. If the
contraction continues for
six months, the economy is
said to be in a recession
(when GDP declines for six
months in a row).
When the economy has
bottomed out, it has reached
the lowest point. When the
economy is in the trough, it is
not growing. Factory
production is down; therefore
unemployment is at its
highest. Consumers are not
buying and prices for many
goods and services have
fallen.
One extension activity for the business cycle is to have students watch
Kingdom of Mocha and mark events in the cartoon that relate to the
different parts of the Business Cycle.
4.1.4 a-e
A.
Describe the role of the United States Congress and the Maryland
General Assembly in developing fiscal policy and the approval of
budgets
B.
Describe how national, state, and local legislative bodies use taxing and
spending to influence the economy
C.
Evaluate the effectiveness of fiscal policy in achieving economic growth
and employment, such as tax incentives and changes in spending (Unit 3)
D.
Analyze the role of the executive on the national, state and local level in
the budgetary process
E.
Determine how the executive branch influences economic performance by
using the tools of fiscal policy including increasing and decreasing taxes
and tariffs and/or spending (Unit 4)
2013 Interactive Budget
 As
a group analyze the scenario you have
been provided.
 Indentify:
1. The economic indicator(s) related to the scenario
(GDP, CPI, Unemployment) and what they tell you
about the economy.
2. The current state of our economy on the business
cycle based on the economic indicators.
3. A recommendation for using fiscal policy to “fix” the
economy.
4. A prediction of the impact of your recommendation.
 Prepare
a presentation for the class
offering your recommendation to “fix”
the economy.
 Include:
• An illustration of the location on the business
cycle
• The related indicators
• Recommendation
• Predicted Effect on the economy
 Helpful Websites
for Teaching Economics
Handout
 What
Students Need to Know About
Economics on the H.S.A. Handout
 What
major concepts do students need
to know about fiscal policy for the
H.S.A.?
 What
are some engaging ways that you
can teach students about fiscal policy?
 Feel
free to email us with any questions.
• Annie Caldwell – [email protected]
• Missy LaCroix – [email protected]