1. What’s the State of Our Economy Now?
Economic Indicator
Look Up Info Here
Status Update
Unemployment
Bureau of Labor Statistics
“bls unemployment March 2017” 1.
GDP Growth Rate
Bureau of Economic Analysis
“bea gdp growth Q1 2017” 2.
Inflation
Trading Economics
“US inflation rate 2017” 3.
4. How would you rate the economy?
Find a news articles discussing Congress’ latest budget proposal—look at CNN, Fox, NPR, BBC, etc. May 2017
5. List expansionary changes
6. List contractionary changes
7. How would you improve on the current budget (opinion)?

2. How does the Government Stabilizes the Economy?
The Government has two different tool boxes it can use:
1. Fiscal Policy-
Actions by Congress to stabilize the economy. OR
2. Monetary Policy-Actions by the Federal Reserve Bank to stabilize the economy.

3. Fiscal Policy What is Macroeconomics? Yale Prof explains
Fiscal policy is changes government makes in spending or taxation to achieve particular economic goals.

4. Fiscal Policy President and Congress
Responsible for influencing the economy through policies of taxing and spending

5. Fiscal Policy And Invisible Hand
Adam Smith believed individuals maximizing their own good through trade and entrepreneurship benefits society as a whole
government intervention in the economy isn't needed
the invisible hand is the best guide for the economy

6. Fiscal Policy History
Things chugged along nicely until and the Great Depression

7. Fiscal Policy History
During the Great Depression the business cycle didn’t recover quickly
Americans were suffering and wanted help

8. Fiscal Policy History During the Great Depression, British economist
John Maynard Keynes said,
“In the long run we are all dead.”
The government should use their power to tax and spend to stimulate the economy and lessen suffering.

9. Fiscal Policy History Continued
The goal of Keynesian Theory during a depression?
curb inflation (keep it between 2-3%)
increase employment
maintain a healthy value of money.
When inflation is too strong, the economy may need a slowdown

10. Keynesian Economic Theory
EOC study guide
Macroeconomics #10
Keynesian Economic Theory
States that governments can influence macroeconomic productivity levels by increasing government spending and decreasing taxes when times are bad OR
Decreasing government spending and Increasing taxes when times are good.

11. Why have business cycles not been as severe since the Great Depression?
Government safeguards and balances have been implemented
US GDP

12. Economic Stabilizers Created 1935
If there is a downturn in the economy, safety nets kick in without any additional Congressional action:
Social Security Act
Unemployment Insurance and
Welfare

13. Fiscal Policy GDP = C + I + G + Xn
Fiscal policy is the government’s use of G and T to affect aggregate demand in order to stabilize the economy

14. Fiscal Policy History
FDR spends US out of the Great Depression

15. 2007-2009—The Great Recession? Inflation Unemployment numbers by BLS
Gross Domestic Product

16. Economic Stimulus Act of 2008
Intended to boost the United States economy and to avert a recession
Signed into law on February 13, 2008 by President Bush with the support of both Democratic and Republican lawmakers.
Provides for tax rebates to low- and middle-income U.S. taxpayers, tax incentives to stimulate business investment, and an increase in the limits imposed on mortgages eligible for purchase by government- sponsored enterprises
Total cost of this bill was projected at $152 billion

17. American Recovery and Reinvestment Act of 2009
In response to the Great Recession, it’s the primary objective was to save and create jobs
Its secondary objectives were to provide temporary relief programs for those most impacted by the recession and invest in infrastructure, education, health, and renewable energy.
Approximate cost of the economic stimulus package was estimated to be $800 billion
It included direct spending in infrastructure, education, health, and energy, federal tax incentives, and expansion of unemployment benefits

18. Definitions 'Expansionary Fiscal Policy'
An increase in government spending Or
A reduction in taxes
EOC study guide
Macroeconomics #12

19. Increasing Government Spending Causes Inflation, Raises Interest Rates and Increases National Debt

20. Definitions 'Contractionary Fiscal Policy’
A decrease in government spending Or
An increase in taxes
EOC study guide
Macroeconomics #13

21. Mondale runs on a raise taxes platform

23. Fiscal Policy Problem/Solution
When the US has high unemployment rate what can Congress do to lower it?
EOC study guide
Macroeconomics #21

24. Fiscal Policy Problem/Solution
Unemployment is extremely high
What can Congress do?
Expansionary Fiscal Policy:
Congress could increase government spending
Lower taxes
EOC study guide
Macroeconomics #21 cont.

25. Fiscal Policy Problem/Solution
EOC study guide
Macroeconomics #20 cont.
Fiscal Policy Problem/Solution
Venezuela has high inflation rates
What can their government do to fix it?

26. Fiscal Policy Problem/Solution
Venezuela has high inflation rates
What can their government do?
Contractionary Fiscal Policy:
Decrease government spending
Raise taxes on businesses and individuals
EOC study guide
Macroeconomics #20

27. Investopedia 2 views on fiscal policy video clip