Download Unit 3B- Fiscal Policy

FISCAL POLICY
Topic
Comparison of
Keynesian and
Classical Theories
Topic
Multiplier effect of
increased spending
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Topic
Fiscal Policy
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Topic
Taxes
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Learning Targets
Describe basic principles of classical economics
Describe basic principles of Keynesian economics
Learning Targets
Calculate multiplier effect of changes in spending and taxes
Calculate multiplier effect of identical changes in spending
and taxes
Analyze impact of inflation on the multiplier on horizontal,
upward-sloping, and vertical AS curves
Learning Targets
Define discretionary fiscal policy
Explain how expansionary and contractionary policy is
enacted
Explain fiscal policy impact on government's budget
Explain impact of deficit spending on loanable funds market
Be able to graph loanable funds market and analyze changes
in the demand and supply in that market
Define automatic stabilizers and give examples
Learning Targets
Define effective tax rate
Define and give example of progressive tax
Define and give example of proportional tax
Define and give example of regressive tax
Explain how taxes can be automatic stabilizer
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Academic Vocabulary
Classical theory
John Maynard Keynes
Self-correcting economy
Sticky prices
Average propensity to consume (APC)
Average propensity fo save (APS)
Marginal propensity to consume (MPC)
Marginal propensity to save (MPS)
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Academic Vocabulary
Formula for spending multiplier: 1/MPS
Formula for tax multiplier:Me– 1
Formula for balanced budget multiplier
Academic Vocabulary and graph
Discretionary fiscal policy
Expansionary
Contractionary
Counter-cyclical
Deficit
Surplus
Automatic stabilizer
Loanable funds market
Academic Vocabulary
Effective tax rate
Progressive tax
Regressive tax
Proportional (flat) tax
Topic
Full-employment
budget
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Learning Targets
Define full-employment budget
Analyze impact of planned deficit on full-employment
budget
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Topic
Problems with fiscal 
policy
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Academic Vocabulary
Full-employment budget deficit/surplus
Cyclical budget deficit/surplus
Learning Targets
Describe problems with fiscal policy
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Explain why fiscal policies of state and local governments are 
frequently pro-cyclical
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Learning Targets
Academic Vocabulary
Recognition lag
Administrative lag
Operational lag
Political business cycle
Offsetting state and local finance
Pro-cyclical
Crowding out
Academic Vocabulary and graph
Net export effect of
fiscal policy
Topic
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Analyze net export effect of expansionary and
contractionary fiscal policy
Learning Targets
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Capital inflows, outflows
Foreign exchange market (graph)
Academic Vocabulary and graph
Supply-side fiscal
policy
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Topic
Learning Targets
Laffer curve
Supply-side economics
Marginal tax rates
Academic Vocabulary
Federal budget
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Mandatory
Discretionary
US bonds
Entitlement programs
Topic
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Describe and graph the Laffer curve
Define basic principles of supply-side economic theory
Describe largest sources of federal revenue
Describe main categories of government spending
Explain difference between national debt and deficit
Define mandatory spending and give examples of mandatory
spending categories
Define discretionary spending and give examples of
discretionary spending
Explain how the government finances its deficit spending