Chapter 15

Chapter 15 Fiscal Policy
Read the Profile of John Maynard Keynes  (402) 
1. Before Keynes what did most economists think the role of the government should be?   How did Keynes change this role?   Why are Keynes' views controversial today?

15(1) Understanding Fiscal Policy (387)
2. Look at 15.1 (388) What is the role of the OMB (Office of Management and Budget)? Why do you think Congress has a CBO (Congressional Budget Office)?
3.  Look at 15.2 (389) What happens to aggregate demand when the government increases its spending? 
4. Look at 15.3 (390)  How might cutting taxes have a similar effect to government spending?
5. Read the Global Connections (392) what happened in Japan when it tried an expansionary fiscal policy?  Why not?
Answer questions #1-6 on page 393.  Odd/Evan

15(2) Fiscal Policy Options
Define :
classical economics
Keynesian economics
supply-side economics
multiplier effect
automatic stabilizer
productive capicity
What is pictured on page 397?  Why?
Answer questions 5+6 on page 401

15(3) Budget Deficits and National Debt
What is the difference between national debt and national deficit?
1. Look at the chart 15.9 (404)  What affect did the Bush (2002-2009 budgets) tax cuts have on the annual budget?
2. Look at 15.10 (406)  what is the point of the chart? 
3.  Look at 15.11 (407)  What is crowding out?
4. Look at fast fact (407) What would be a problem with a federal balanced budget amendment?
Answer question 4 on page 408.