HOW: Be able to describe and explain the macroeconomic conditions when it would be appropriate to utilize demand-side and supply-side policies and to understand their respective strengths and limitations in creating change.
STARTER: The cartoon below appeared in the Economist magazine in 2016, when the last economic recession was feared. Look carefully at details from the cartoon. What individual details can you see that would allow you to form understanding of the cartoonists message? Was the cartoonist right, how do you know?
ACTIVITY 1: A primer on government policy instruments - Or 'the economic toolkit'. Read through the handout to gain an overview of the types of demand -side and supply-side policies that are in the governments tool-kit. You need to be able to demonstrate their uses and applications, macroeconomic problems that they can appropriately solve and their strengths and weaknesses and possible unintended consequences of utilization. Refine the key ideas down to a single page. You might like to create a revision poster to help you to do this.
ACTIVITY 2: Choosing the right policy instrument. Identify the problems and suggest possible solutions that are appropriate. Identify any challenges or trade-offs that may occur as a result of your proposed solution.
ACTIVITY 3: What policies are right for our own 'Corona economic times'? Read the article below. What policies would be appropriate for each economic scenario?
What shape will the coronavirus recession be?
Even though countries are now moving towards easing lockdown restrictions, the coronavirus pandemic has already hit the global economy hard. Millions of people are out of work, financial markets have been rocked, and supply chains have faced major disruption as factories around the world have closed.