Fiscal policy

Fiscal Policy

Economy is moving too slow (high unemployment, low GDP)

Economy is too fast (high inflation/CPI)

​What does fiscal policy do?

Puts money into the economy (More money, more spending, more jobs)

Takes money out of the economy (less money, less spending, lower inflation)

​Who does Fiscal policy?

President and Congress use taxing and spending.


Higher taxes means people have less money to spend.
Lower taxes mean people have more money to spend.
More government programs mean more jobs and more money.
Less government programs mean fewer jobs and less money.

​What is the goal of fiscal policy?

Promote employment
Promote GDP
Fight inflation.

What is fiscal all about?

• taking money out of the economy if there is too much inflation.

• putting money into the economy if there is too much unemployment.

Raise taxes to slow spending.

Cut government spending to take money out of the economy.

Decrease demand for goods and decrease inflation.

​Contractionary (High demand, high inflation)

Lower taxes to give consumers more money to buy goods.

​Increase government spending to put more money into the economy.

Expansionary (low production, low spending, high unemployment.)

How does fiscal policy work?

What event pushed fiscal policy development?

• The Great Depression

• New Deal programs (alphabet agencies) were all about getting people back to work.

Multiple Choice

Who is in charge of fiscal policy?

• President and Congress

• Federal Reserve

Multiple Choice

The tools of fiscal policy are...

• Interest rates

• Taxes and Government spending

• Checks and balances

• Open market operations

Multiple Choice

When the government raises taxes, what does it take out of circulation?

• Money
• Credit
• People
• Jobs

Multiple Choice

Taxing & spending to slow the economy is referred to as 

• budget surplus 
• monetary policy
• contractionary policy
• budget deficit

Multiple Choice

Taxing & spending to help the economy grow is referred to as

• expansionary policy
• monetary policy
• contractionary policy
• budget deficit

Dropdown

If there is a high rate of inflation, the government should collect ​

Select answer

Multiple Choice

Increased taxes lead to

• more spending

• less spending

Multiple Choice

__________ refers to the government's ability to raise taxes and spend the money it raises.

• Fiscal Policy

• Monetary Policy

• Social Policy

How does the government know the health of the economy?

• Consumer Price Index (CPI) measures change in prices (inflation)

• Gross Domestic Product (GDP) measures how much the economy is producing.

• Unemployment rate measures how many people who want jobs can't find them.

Multiple Choice

Measures how much the economy produces?

• Unemployment rate

• Inflation

• Consumer Price Index

• Gross Domestic Product

Multiple Choice

The number of people who want a job but can't find one.

• Unemployment rate

• Inflation

• Consumer Price Index

• Gross Domestic Product

Multiple Choice

Measures inflation?

• Unemployment rate

• Inflation

• Consumer Price Index

• Gross Domestic Product

Multiple Choice

Rise in prices over time

• Unemployment rate

• Inflation

• Consumer Price Index

• Gross Domestic Product

Remember:

• Raising taxes and cutting government spending means people have less money to spend.

• Lowering taxes and increasing government programs means people have more money to spend.

How does this relate to the budget?

• The budget includes government spending and taxes where the government makes fiscal policy decisions.

Multiple Choice

Who proproses the National budget

• Congress
• President
• Justices

Examples of Fiscal Policy:
In the next several slides, pretend you are the president or a member of Congress. Should you raise or lower taxes?

Multiple Choice

Unemployment is rising, businesses are closing, and people are spending less.

• Raise taxes

• Lower taxes

Multiple Choice

Unemployment is rising, businesses are closing, and people are spending less. Where are we in the business cycle?

• expansion

• peak

• contraction

Multiple Choice

Prices for food, gas, and housing are rising fast. Consumers are spending too much too quickly, and the economy is overheating.

• Raise taxes

• Lower taxes

Multiple Choice

Growth is weak. People are saving instead of spending, and companies aren’t investing in new workers or equipment.

• Raise taxes

• Lower taxes

Multiple Choice

The government is spending far more than it collects, and debt is increasing.

• Raise taxes

• Lower taxes

Multiple Choice

The government is spending far more than it collects, and debt is increasing.

• Increase spending

• Decrease spending

Multiple Choice

Millions of workers are losing their jobs, and businesses are struggling to stay open. People have less money to spend, which is slowing the economy even more.

Should the government increase spending (for example, on job programs or unemployment benefits) or decrease spending and save money?

• Increase spending

• Decrease spending

Multiple Choice

Prices for everyday items—food, gas, clothing—are rising quickly. Families are having a hard time keeping up, and the cost of living is growing faster than wages.

Should the government increase spending or decrease spending to help slow inflation?

• Increase spending

• Decrease spending

Multiple Choice

A huge hurricane, wildfire, or flood has damaged cities and communities. Thousands of people need shelters, food, repairs, and emergency services.

Should the government increase spending or decrease spending to respond to this crisis?

• Increase spending

• Decrease spending

Poll

How would your rank your understanding of fiscal policy?

• Good

• Okay, but need a bit more

• Not good