Your SlideShare is downloading. ×
  • Like
16. a. answers to fiscal policy questions
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Now you can save presentations on your phone or tablet

Available for both IPhone and Android

Text the download link to your phone

Standard text messaging rates apply

16. a. answers to fiscal policy questions

  • 201 views
Published

 

Published in Business , News & Politics
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
201
On SlideShare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
2
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide
  • {}

Transcript

  • 1. FISCAL ACTION As a result of economic recovery, the amount paid in unemployment benefits declines. Federal and Provincial income taxes are increased. EXPANSIONARY OR CONTRACTIONARY POLICY? AUTOMATIC OR DISCRETIONARY STABILIZER? a) EXPANSIONARY AUTOMATIC CONTRACTIONARY DISCRETIONARY As the recession deepens, government expenditures on welfare benefits increase. EXPANSIONARY AUTOMATIC As the economy recovers the government collects more in income taxes. CONTRACTIONARY AUTOMATIC CONTRACTIONARY DISCRETIONARY The favourable tax breaks on capital gains (income from investment) are abolished.
  • 2. SITUATION AGGREGATE DEMAND HAS BEEN HIGH OR LOW? TAX REVENUES GOV’T HAVE BEEN SPENDING HAS HIGH OR LOW? BEEN HIGH OR LOW? RESULTING BUDGET WILL BE TOWARD A SURPLUS OR DEFICIT? Inflation is at 12% and rising. HIGH Unemployment is at 13% and rising. LOW LOW LOW DEFICIT LOW LOW LOW DEFICIT HIGH HIGH HIGH SURPLUS a) Business confidence in the future is at an all-time low. Consumer confidence is high. Economist are predicting rising inflation. HIGH HIGH SURPLUS
  • 3. 3. What are two fiscal measures that the government can take during a boom? a) increase taxes b) decrease gov’t spending. 4. What are two fiscal measures that the government can take during a recession? a) decrease taxes b) increase gov’t spending 5. What are two factors that limit the effectiveness of fiscal policy? a) time lags (democratic process is slow) b) action that will help one area could hurt another.
  • 4. 6. Define the following terms in your own words. a) Fiscal Policy - gov’t directed policy to stabilize the economy. b) Automatic Stabilizers - policies all ready in place that work to bring stability to the economy. Example: - income taxes, E.I. c) Discretionary Stabilizers - policies put in place with the specific intent to bring stability to the economy. May be temporary. Example: - increased infrastructure spending, cut backs to health care or education. d) Deficit spending - allowing expenses to exceed revenues e) Public works - projects and programs in place to benefit the public as a whole Example: - medicare, garbage collection, defence, roads
  • 5. fiscal policy review Recession/trough Inflation/boom GDP - down GDP - up Macro-economic employment- down employment - up signs prices - down prices - up Automatic Stabilizers at work in the ecnoomoy - gov’t revenues low - gov’t revenues high - gov’t spending on EI, -gov’t spending low welfare up Budget deficit Budget Surplus Discretionary - decrease income tax - increase taxes Stabilizers that rates - cut back on gov’t the gov’t may - increase spending spending put in place Budget deficit Budget Surplus
  • 6. fiscal policy review Recession/trough Inflation/boom GDP - down GDP - up Macro-economic employment- down employment - up signs prices - down prices - up Automatic Stabilizers at work in the ecnoomoy - gov’t revenues low - gov’t revenues high - gov’t spending on EI, -gov’t spending low welfare up Budget deficit Budget Surplus Discretionary - decrease income tax - increase taxes Stabilizers that rates - cut back on gov’t the gov’t may - increase spending spending put in place Budget deficit Budget Surplus