1. Fiscal Policy

2. What is fiscal policy for?
Gov’t uses taxes/ spending to help economy grow
During recession: stimulate  increase spending + cut taxes
During expansion  decrease spending + raise taxes

3. Automatic stabilizers
Begin working to stimulate economy as soon as needed (already in place; don’t need gov’t)
Unemployment benefits
Progressive income tax

4. Federal budget: surplus vs. deficit
Surplus: revenue > spending
Deficit: spending > revenue
Deficit? Must borrow $ (bonds)
National debt= gov’t unpaid debt
Balanced budget: spending = revenues

5. Impact of National Debt
We owe most of debt to ourselves (bonds)
Paying Interest
Must pay interest on national debt
More debt = more interest = more taxes
Interest Rate
Fed gov’t borrows $ = less for citizens (increased interest rate)
US National Debt Clock

6. The Federal Reserve & Monetary Policy

7. “Now I Get It” – The Federal Reserve Explained https://screen. yahoo