Topic 11: Fiscal Policy
Key Points
- Know the distinction between expansionary and contractionary fiscal policy
- Understand the multiplier effect for changes to both government purchases and personal income taxes
- Analyze the short-run and the long-run economic impact of fiscal policy shocks
- Describe how larger deficits create a “crowding out” of private spending
- Explain the association between government deficits and trade deficits
- Distinguish between debts and deficits
Videos
Fiscal Policy Multipliers
Fiscal Policy Using AS-AD
Budget Deficits and Trade Deficits
Debts and Deficits