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3 Fiscal Policy: The Basics
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CHAPTER 29
Fiscal Policy
PowerPoint® Slides by Can Erbil
© 2005 Worth Publishers, all rights reserved
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What you will learn in this chapter:What fiscal policy is and why it is an important tool in managing economic fluctuationsWhich policies constitute an expansionary fiscal policy and which constitute a contractionary fiscal policyWhy fiscal policy has a multiplier effect and how this effect is influenced by automatic stabilizersHow to measure the government budget balance and how it is affected by economic fluctuationsWhy a large public debt may be a cause for concernWhy implicit liabilities of the government are also a cause for concern
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Fiscal Policy: The Basics
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Sources of Tax Revenue in theUnited States, 2004
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Government Spending in theUnited States, 2004
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The Government Budget and Total Spending
Fiscal policy is the use of taxes, government transfers, or government purchases of goods and services to shift the aggregate demand curve.
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Expansionary and Contractionary Fiscal PolicyExpansionary Fiscal Policy Can Close a Recessionary Gap
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Expansionary and Contractionary Fiscal PolicyContractionary Fiscal Policy Can Eliminate an Inflationary Gap
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The Multiplier Effect of an Increase in Government Purchases of Goods and Services
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How Taxes Affect the MultiplierAutomatic StabilizersDiscretionary Fiscal Policy
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Differences in the Effect of Expansionary Fiscal Policies
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The Budget Balance as a Measure of Fiscal Policy
expansionary fiscal policiescontractionary fiscal policies
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The U.S. Federal Budget Deficit and the Business Cycle
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The U.S. Federal Budget Deficit and the Unemployment Rate
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The Actual Budget Deficit Versus the Cyclically Adjusted Budget Deficit
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Government Debt as a Percentage of GDP
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U.S. Federal Deficit and the Federal Debt-GDP Ratio since 1939
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Japanese Deficits and Debt
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The Implicit Liabilities of the U.S. Government
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The End of Chapter 29
coming attraction:Chapter 30:
Money, Banking, and the Federal Reserve System
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