TAILIEUCHUNG - Lecture Issues in economics today - Chapter 11: Fiscal policy

After studying this chapter you will be able to: Describe and model discretionary and nondiscretionary fiscal policy using an aggregate supply and aggregate demand diagram, distinguish between aggregate demand and aggregate supply shocks, acknowledge and enumerate the problems associated with discretionary fiscal policy, describe nondiscretionary fiscal policy as the mainstay of our current macroeconomic system. | Chapter 11 Fiscal Policy Chapter Outline NONDISCRETIONARY AND DISCRETIONARY FISCAL POLICY USING FISCAL POLICY TO COUNTERACT “SHOCKS” EVALUATING FISCAL POLICY Fiscal Policy Fiscal Policy is the purposeful movement in government spending or tax policy designed to direct an economy Discretionary Fiscal Policy: government spending and tax changes enacted at the time of the problem to alter the economy Nondiscretionary Fiscal Policy: that set of policies that are built into the system to stabilize the economy How Nondiscretionary Fiscal Policy Works Nondiscretionary fiscal policy consists of policies that are built into the system so that an expansionary or contractionary stimulus can be given automatically. The welfare state and the progressive income tax serve as the built-in policies. If the economy is in recession, those who lose their jobs are granted unemployment and welfare benefits and they owe less in taxes. If the economy is growing at an unsustainable rate, people are making a .

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• Issues in economics today
• Lecture Issues in economics today
• Macroeconomic issues
• International issues
• Price control issues
• Fiscal policy
• Economics of crime
• Economics of children
• Opportunity cost
• Prescription drugs
• Demand model
• Elasticity of demand
• Firm production
• Perfect competition
• Gross domestic product
• Federal spending
• Monetary policy
• Flaws in the CPI
• International trade
• International monetary fund
• Trade agreements
• Economic model
• Environmental problems
• Economic models of health care
• Medicaid costs
• Public insurance
• Human capital
• Measuring poverty
• Social security
• Head start