Fiscal Policy

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​FISCAL POLICY

HOW:
  • Explain that government spending can be classified into current expenditures, capital expenditures and transfer payments, providing examples of each.
  • Distinguish between a budget deficit, a budget surplus and a balanced budget.
  • Explain the relationship between budget deficits/surpluses and public (government) debt. 
  • Explain how changes in the level of government expenditure and/or taxes can influence the level of aggregate demand in an economy. 
  • Explain the mechanism through which expansionary fiscal policy can help an economy close a deflationary (recessionary) gap. 
  • Construct a diagram to show the potential effects of expansionary fiscal policy, outlining the importance of the shape of the AS curve.
  • Explain the mechanism through which contractionary fiscal policy can help an economy close an inflationary gap. 
  • Construct a diagram to show the potential effects of contractionary fiscal policy, outlining the importance of the shape of the AS curve. ​​
  • Explain how factors including the progressive tax system and unemployment benefits, which are influenced by the level of economic activity and national income, automatically help stabilise short-term fluctuations.
  • Evaluate the view that fiscal policy can be used to promote long-term economic growth (increases in potential output), indirectly by creating an economic environment that is favourable to private investment and directly through government spending on physical capital goods and human capital formation, as well as provision of incentives for firms to invest.
  • Evaluate the effectiveness of fiscal policy.
WHY: In most developed countries the size of government expenditure as a percentage of total national expenditure (the G component of AD) can be as much as 50% of the economy and is usually at least 30%. It is important to note therefore the importance that government expenditure has on the national economy.

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Made with Padlet

U.S. National Debt Clock : Real Time

US National Debt Clock : Real Time U.S. National Debt Clock

NEWS STORIES RELATED TO FISCAL POLICY AND THE CORONA VIRUS:

Will coronavirus mean I have to pay more tax?

Coronavirus has brought large parts of the economy to a standstill, and the government has had to spend billions to support workers, businesses and the NHS. So where is all the money going to come from? It's still very early in the crisis, so it's impossible to tell how big the final bill will be.

US to borrow record $3tn in pandemic spending

The US has said it wants to borrow a record $3tn (£2.4tn) in the second quarter, as coronavirus-related rescue packages blow up the budget. The sum is more than five times the previous quarterly record, set at the height of the 2008 financial crisis. In all of 2019, the country borrowed $1.28tn.

Why You Worked for the Government Until April 19, 2018

Tax Freedom Day ® is the first day each year that Americans work for themselves. In 2019 it arrived on April 16th. Every dollar earned before that pays for federal, state, and municipal government services. It's a way to visualize your tax burden.

Fig. 1: How is the federal budget drawn-up in the USA and why does this often result in government shut downs?
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1 Fiscal PolicyLesson Outcomes:
  • To explain that the government earns revenue primarily from taxes (direct and indirect), as well as from the sale of goods and services and the sale of state-owned (government-owned enterprises)
  • Explain that government spending can be classified into current expenditures, capital expenditures, and transfer payments and be able to provide examples of each
  • Distinguish between budget surplus, deficit and a balanced budget
Using the 2018 UK budget report  answer the questions on the worksheet, then prepare for a discussion on 'Are the UK's public finances in good shape?'
A interesting article about what happens when public finances aren't in good shape.
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The crisis in care

Over 10 months, a small team from the BBC's Panorama programme documented the realities of how the care system is working in England. Based in Somerset, they followed the stories of people needing care and of the people trying to provide it.

The human face behind mandatary social protection government expenditures in the UK.
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case study: Tax Cuts and Jobs Act of 2017 (December 2017)

On December 2018 the biggest reform of the tax system since the Reagan administration in 1980's was passed by Congress.
tax_reform.pptx
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fiscal_policy__1_.pdf
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Evaluating FISCAL POLICY

PAPER 1 PRACTICE: 15 mARK qUESTIONS

fiscal_policy_15_mark_markscheme.pptx
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(a) Explain how automatic stabilisers help smooth out short-term fluctuations of the business cycle. [10 marks] 
(a) Using diagrams, describe how fiscal policy can be used to close recessionary and inflationary gaps. [10 marks]
(a) Explain the following statement: ‘Fiscal policy has a dual role: it can help smooth out short-term fluctuations in economic activity, and it can help promote growth in potential output.’ [10 marks] 
(b) Evaluate the effectiveness of fiscal policy. [15 marks]




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the bond market and the crowding-out effect

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        • Y8: Model United Nations
    • Year 7 Humanities >
      • Year 7 Geography >
        • Biomes
        • How did the impacts of the Haiti and Japanese earthquake compare?
        • Geography in the news
      • Year 7 History >
        • 1. The Ancient World >
          • a. Prehistoric Life >
            • Middle School History
          • b. Egypt or Rome? >
            • Historical Enquiry - Comparing Ancient Societies
            • Ancient Egypt
            • Ancient Rome
          • Assessment
        • 2. The Medieval World >
          • "Muck and Misery" Investigation
          • Medieval Guidebook Assessment
          • Medieval Baghdad
        • 3. The American West >
          • Native American Culture
          • The First Settlers
          • Pioneers
          • Cowboys and cow towns
          • Impact of settlement on the Native Americans
          • Assessment
        • 4. The Industrial World
        • 5. Civil Rights
        • 6. The Significance of the Lives of Ordinary People
        • 7. Year 7 Assessments
        • 8 . Digital Library
  • HS Geography
    • IB Geography >
      • Introduction to IB Geography
      • Paper 1- Geographic Themes >
        • Urban Environments >
          • Urban sections 1-3
          • Sustainable Cities
        • Leisure, sport and Tourism >
          • Introduction to Leisure, sport and tourism
          • A global sporting event- The Olympics
          • Managing Rural Tourism Hotspots
          • Managing urban tourism hotspots
          • Tourism as a development strategy
          • Sustainable tourism
          • Variations in Sphere of Influence
          • The impact of Rural festivals
        • Geophysical Hazards >
          • Earthquakes
          • Volcanoes
          • Landslides
      • Paper 2: Geographic perspectives >
        • Changing populations >
          • Population density
          • Processes of population change >
            • Megacities
            • Forced migration
          • Possibilities of population change >
            • Aging population
            • Population policies
            • Gender Equality
            • Human trafficking
            • Demographic dividend
          • Debate: Should the UN curb population growth?
        • Global Climate - Vulnerability and Resilience >
          • The causes of global climate change
          • Impacts of climate change
          • ​Disparities in exposure to climate change risk and vulnerability
          • GOVERNMENT LED ADAPTATION AND MITIGATION STRATEGIES
          • Civil society and corporate strategies to address climate change
        • Global resource consumption and security >
          • Global trends in consumption >
            • GLOBAL AND REGIONAL/CONTINENTAL PROGRESS TOWARDS POVERTY REDUCTION.
            • Measuring trends in global consumption
            • Patterns and trends in the availability and consumption of water
            • Global patterns and trends in the availability and consumption of land/food
            • Global patterns and trends in the availability and consumption of energy
          • Nexus thinking >
            • Two countries with contrasting levels of resource security...
            • Waste disposal and recycling
          • Resource Stewardship >
            • Divergent thinking about population and resource consumption trends
            • The circular economy
        • Infographics
      • Paper 3: Global Interactions >
        • Power, place and networks >
          • Global networks and flows
          • Global Interactions & Global Power
          • Human and physical influences on global interactions
        • HUMAN DEVELOPMENT & DIVERSITY >
          • Development opportunities
          • Changing cultures and identities
          • Cultural Hybridity
          • Local responses to global interactions
        • Environmental risks
        • Geopolitical and economic risks
      • IB Revision- mocks 2021
      • IB Revision
      • Internal Assessment
      • Extended Essay in Geography
    • IGCSE Geography >
      • Population and Settlement >
        • Population >
          • Why is population growing?
          • Population density and distribution
          • Over and Under population
          • Dependent populations
          • Population policy: One Child policy China
          • HIV and AIDs
          • Migration
          • Population revision
          • Debate: Should the UN curb population growth?
        • Settlement >
          • Settlement and service provision
          • Urbanisation
      • Natural Environment >
        • Earthquakes and Volcanoes >
          • Plate tectonics
          • Case study of a volcano: Montserrat
          • Haiti Earthquake
          • Why do people live in hazardous areas?
          • Tectonics revision
          • REVISION- WHAT HAPPENS AT TECTONIC PLATES?
        • Rivers >
          • Hydrological characteristics and processes
          • River Landforms
          • Benefits and threats of rivers
          • Management of rivers: Hard and Soft engineering
          • Rivers revison
        • Coasts >
          • Coastal processes
          • Coastal management
          • Different coastal environments
          • Mangroves
          • Hurricanes- cyclone Alia, Bangladesh
          • Hurricanes- Hurricane Harvey
          • Coasts revision
          • Coastal skills
        • Weather and Climate >
          • Weather measurements
          • The Tropical Rainforest Ecosystem
          • Deserts
          • Climate and vegetation revsion
      • Economic Development >
        • 3.1 Development
        • Industry
        • Globalisation
        • Food production
        • Water
        • Tourism
        • Energy
        • Environmental risks of economic development
        • economic development revision
      • Geographical Enquiry
      • Geographical Skills
      • IGCSE Revision
      • IGCSE Revision for mid course assessments April 2021
      • Year 11 Geography mock revision: Jan 2021 >
        • Paper 2: Geographical Skills
        • Paper 4: Fieldwork paper
        • Paper 1: Knowledge paper
  • HS Economics
    • IB ECONOMICS TEACHER PAGES >
      • Activity Styles
    • Year 10 >
      • 1.0 THE BASIC ECONOMIC PROBLEM
      • 2.0 HOW MARKETS WORK AND MARKET FAILURE
      • 3.0 THE INDIVIDUAL AS PRODUCER, CONSUMER AND BORROWER >
        • 3.3 Workers
        • 3.4 Firms
        • 3.5 Small firms and causes and forms of the growth of firms
        • 3.6 Economies and diseconomies of scale
        • 3.7 Firms costs, revenues and objectives
        • 3.8 Firms and Production
        • 3.9.5 Monopoly Markets
      • REVISION OF UNITS 1, 2 AND 3
      • SUMMER LEARNING
    • Year 11 >
      • 4.0 THE ROLE OF GOVERNMENT IN AN ECONOMY >
        • 4.1 Introduction to Macroeconomics
        • 4.1.1 The Role of Government
        • 4.2.1 Macroeconomic Aims of Government
        • 4.2.3 Economic Growth
        • 4.7 EMPLOYMENT AND UNEMPLOYMENT
        • 4.8 INFLATION
        • 4.4.0 FISCAL POLICY
        • 4.4.1 MONETARY POLICY
        • 4.1.2 SUPPLY-SIDE POLICIES AND MACROECONOMICS REVISION
      • 5.0 ECONOMIC DEVELOPMENT >
        • Top Trumps: Economic Development
        • 5.1 DIFFERENCES IN ECONOMIC DEVELOPMENT
        • 5.3.1 POVERTY
        • 5.3 POPULATION
      • 6.0 INTERNATIONAL ASPECTS >
        • 6.2 ​GLOBALISATION, FREE TRADE AND PROTECTION
        • 6.3 EXCHANGE RATES AND THE CURRENT ACCOUNT
      • iGCSE Economics Revision Sessions - May 23rd to June 1st
      • Revision Support
    • Year 12 >
      • 1. Introduction to Economics
      • 2. Microeconomics >
        • 2.A. COMPETITIVE MARKETS: DEMAND AND SUPPLY >
          • HL Demand FE 2022
        • 2.B.ELASTICITIES
        • 2.C.GOVERNMENT INTERVENTION >
          • HL 2020 Government intervention
        • 2.D.MARKET FAILURE >
          • To What Extent Does the American Health Care Market Represent a Market Failure?
        • HL: RATIONAL PRODUCER BEHAVIOR
        • 2.E.THE THEORY OF THE FIRM 1: PRODUCTION, COSTS, REVENUES, AND PROFIT HL
        • 2.F.THE THEORY OF THE FIRM II: MARKET STRUCTURES HL
        • Real World Examples: Theory of the Firm
      • 3. Macroeconomics >
        • 2A. THE LEVEL OF OVERALL ECONOMIC ACTIVITY
        • 2B. AGGREGATE DEMAND
        • 2C. AGGREGATE SUPPLY
        • THE MULTIPLIER (HL)
        • INFLATION
        • LOW UNEMPLOYMENT
        • EQUITY IN THE DISTRIBUTION OF INCOME
        • ECONOMIC GROWTH
        • OVERVIEW OF DEMAND-SIDE AND SUPPLY-SIDE POLICIES
        • FISCAL POLICY
        • MONETARY POLICY
        • SUPPLY-SIDE POLICIES
      • Exam Papers
      • IA's >
        • IA Marking Exercise
        • Economic Diagrams
      • Extended Essay in Economics
      • SUMMER LEARNING
    • Year 13 >
      • 4. International Economics >
        • 4.A.International trade
        • 4.B.Exchange rates and the balance of payments
        • 4.C.Economics integration and the terms of trade
        • 4.D.Be ambitious resources
      • 5. Development Economics >
        • Understanding Economic Development
        • Topics in Economic Development
        • Foreign sources of finance and foreign debt
        • Consequences of economic growth and the balance between markets and intervention
      • IB Economics - Exams
      • IB ECONOMICS REVISION PAGES >
        • Give Me Fives
        • Economics Past Papers
        • Student Video Tutorials
        • Additional Revision Activities
    • Digital library
    • TOK Inspired Economics Page
    • Process for Deciding Economics University Predicted Grades
  • HS History
    • What is History?
    • IBDP History >
      • Pre - IB History
      • Rationale
      • Introductory Tasks
      • Perspectives Blog
      • IB History Revision Sessions - April 6th to May 1st
      • Paper 1 - Prescribed Subject >
        • Military Leaders >
          • Genghis Khan 1200-1227 >
            • Introduction to the Mongols
            • Mongol Historiography
            • Rise to Power
            • Military Might
            • Leadership
            • Campaigns in China and Asia
            • Impact of the Mongols
            • TOK - Genghis
          • King Richard I of England 1173-1199 >
            • Richard I - Life before 1189
            • Richard I - Crusader King 1190 - 1193
            • Richard I - Military Leadership
            • Richard - Impact
            • Richard I - Reputation and Historiography
            • TOK - Richard I
          • Source Skills
      • Paper 2 - World History Topics >
        • Essay Writing Skills - Paper 2
        • Authoritarian States >
          • Theory
          • Hitler >
            • Emergence and rise to power >
              • HOW MUCH HOPE WAS THERE FOR THE SURVIVAL OF THE WEIMAR REPUBLIC 1919-29?
              • HOW DID THE AIMS AND IDEOLOGY OF THE NAZI PARTY DEVELOP BETWEEN 1919-1923
              • HOW FAR DID THE CONDITIONS OF 1929-33CONTRIBUTE TO THE ESTABLISHMENT OF THE NAZI STATE?
              • WHERE DID SUPPORT FOR NATIONAL SOCIALISM COME FROM?
            • Consolidation and maintenance of power >
              • HOW DID HITLER CONSOLIDATE HIS POWER TO CREATE AN AUTHORITARIAN REGIME?
              • WHAT PART DID PERSONALITY AND PROPAGANDA PLAY IN THE CONSOLIDATION OF POWER?
              • WHAT WERE THE MAIN CHARACTERISTICS OF NATIONAL SOCIALIST GOVERNMENT?
              • WHAT WAS THE NATURE AND EXTENT OF OPPOSITION TO NAZI RULE AND HOW WAS IT DEALT WITH?
              • WHAT WAS THE IMPACT OF FOREIGN POLICY ON HITLER'S CONSOLIDATION AND MAINTENANCE OF POWER?
            • Aims and results of policies >
              • WHAT FACTORS INFLUENCED DOMESTIC AND SOCIAL POLICY
              • ​HOW SUCCESSFUL WAS NAZI ECONOMIC POLICY?
              • WHAT WAS THE RELATIONSHIP BETWEEN THE NAZIS AND THE CHURCHES WITHIN GERMANY?
              • HOW DID THE NAZIS SEE THE ROLE OF EDUCATION AND TRY TO ENSURE THE SUPPORT OF YOUNG PEOPLE?
              • ​HOW DID NAZISM AFFECT THE ARTS AND MEDIA?
              • HOW WERE SOCIAL RELIGIOUS AND RACIAL MINORITIES TREATED WITHIN THE NAZI STATE?
              • WHAT WAS THE POSITION OF WOMEN IN THE NAZI STATE?
              • ​HISTORIOGRAPHY: HISTORIANS VIEWS ON HITLER AS ‘MASTER OF THE THIRD REICH’ AND NAZI GERMANY AS A TOTALITARIAN STATE?
              • HITLER: WEAK OR STRONG DICTATOR? NAZI GERMANY: TOTALITARIAN STATE?
          • Castro >
            • Castro RTP
            • Castro Establisment and consolidation
            • Castro: Aims and results of policies
      • Paper 3 - History of Europe >
        • Essay Writing Skills - Paper 3
        • THE FRENCH REVOLUTION 1774 TO 1815 >
          • THE ORIGINS OF THE FRENCH REVOLUTION
          • 1789: THE END OF THE ANCIEN REGIME
          • CONSTITUTIONAL MONARCHY:REFORMING FRANCE 1789-92
          • WAR, REVOLT AND OVERTHROW OF THE MONARCHY 1792-3
          • GOVERNMENT BY TERROR 1793-4
          • THERMIDORIAN REACTION AND THE DIRECTORY 1794-9
          • THE IMPACT OF THE REVOLUTION
          • NAPOLEON: CONSULATE AND EMPIRE
          • DIGITAL RESOURCES: FRENCH REVOLUTION
        • Imperial Russia 1854 - 1924 >
          • Alexander II
          • Alexander III and Nicholas I
          • 1905 - Revolution
          • Nicholas II and the impact of the First World War
          • The Revolution 1917
          • Lenin and the Soviet Union
      • Internal Assessment (IA) >
        • Formulating a Question
        • Initial Proposal
        • IA Section 1
        • IA Section 2
        • IA Section 3
        • IA Referencing
        • Marking Exercise
        • Timeline Class of 2018
      • Core >
        • Extended Essay
        • Theory of Knowledge
        • CAS
    • IGCSE Cambridge History >
      • Revision Checklists
      • REVISION Past Papers >
        • MODEL Paper 1
        • MODEL Paper 2 >
          • MODEL Paper 2: Cold War Causes
          • MODEL Paper 2: Treaties
      • Depth Study A: WW1 >
        • 1. Why was war not over by December 1914?
        • 2. Why was there stalemate on the Western Front?
        • 3. How important were other fronts?
        • 4. Why did Germany ask for an armistice in 1918?
        • WW1 EXAM QUESTIONS
      • Core Content 1: Treaties
      • Core Content 2 & 3: League 20s & 30s
      • Core Content 4 : Blame for Cold War?
      • Core Content 5: Cold War Conflicts
      • Depth Study B: Germany >
        • 1. Was the Weimar Republic doomed from start?
        • 2. Why was Hitler able to dominate Germany by 1934?
        • 3a. How effectively did the Nazis control Germany?
        • 3b. What was it like to live in Nazi Germany?
  • HS Business
    • REVISION Past Papers >
      • MODEL Paper 2
    • Unit 1 : Understanding Business Activity >
      • IGCSE Business 1.1
      • IGCSE Business 1.2
      • IGCSE Business 1.3
      • IGCSE Business 1.4
      • IGCSE Business 1.5
    • Unit 2 : People in Business >
      • IGCSE Business 2.1
      • IGCSE Business 2.2
      • IGCSE Business 2.3
      • IGCSE Business 2.4
    • Unit 3 : Marketing >
      • IGCSE Business 3.1
      • IGCSE Business 3.2
      • IGCSE Business 3.3
      • IGCSE Business 3.4
      • IGCSE Business 3.5
      • IGCSE Business 3.6
    • Unit 4 : Operations Management >
      • IGCSE Business 4.1
      • IGCSE Business 4.2
      • IGCSE Business 4.3
      • IGCSE Business 4.4
    • Unit 5: Financial Information & Financial Decisions >
      • IGCSE Business 5.1
      • IGCSE Business 5.2
      • IGCSE Business 5.3
      • IGCSE Business 5.4
      • IGCSE Business 5.5
    • Unit 6: External Influences on Business >
      • IGCSE Business 6.1
      • IGCSE Business 6.2
      • IGCSE Business 6.3
  • SOCIOLOGY HOME
    • Unit 1: Theory and Methods >
      • How do sociologists study society?
    • Unit 4: Family
    • The story of Power England
  • TEACHER PAGES
    • Mrs Bennett
    • Ms Capper
    • Mr Bish >
      • WS
      • Top 10's
      • Book club
      • Profile
      • blog: How can self-directed learning be made visible?
    • Mrs Morgan >
      • Debate: Should the UN curb population growth?
      • Books
      • TV and Films
      • Travel
    • Mr Jones
    • Mr Skerry
    • Contact
  • HUMANITIES IN THE NEWS
  • CCA'S AND ENRICHMENT
    • SDGs
    • Real Life History >
      • William H Neyer's Letters 1944-45
      • February 1953
      • March 1953
      • April 1953
      • May 1953
      • June 1953
      • July 1953
      • August 1953
      • September 1953
    • Mini Mock Trial
  • GLOBAL JUSTICE LEAGUE OF BISH
    • VIRTUAL MODEL UN Year 9
    • VIRTUAL MODEL UN
    • Texas State Mock Trial Competition Team
    • TED X
    • BISHMUN 2020 BID
    • Earth Day 2020 >
      • Get Learning
      • Get creative
  • New Page
  • Introduction to year 9 Humanities
  • The UNICEF Global Challenge
  • Year 9 - Leadership Enrichment
    • Week 1 - What is Leadership?
    • Week 2 - What are the qualities of leaders?
    • Week 3 - Who am I? Building self-awareness
    • Week 4: Who am I? Quiz
    • Week 5 - Will you survive?
    • Week 6 - Leadership Styles
    • Week 7 - Be the Boss - Leadership Scenarios
    • Week 8 - Communicating a vision
    • Week 9 - Ethical Leadership
    • Week 10 - Dealing with Conflict
    • Review and Reflection