班级Class

Class 20, Senior 2

题目Topic

Lesson 6 – Fiscal Policy

教学目标和要求 teaching objectives

1. What is fiscal policy? How to conduct it? Why do the economists criticize fiscal policy?

2. What is a multiplier effect?

3. Why is the government spending multiplier greater than tax multiplier?

4. What is budget balance and how is it related to public debt?

重点难点Difficulty and key point

1. Understand the tools of fiscal policy and how to conduct them

2. Differentiate budget deficit and public debt

3. Understand the multiplier effect of fiscal policy

上课内容Course content

1. What is fiscal policy and why is it an important tool in managing economic fluctuations

2. Which policies constitute an expansionary fiscal policy and which constitute a contractionary fiscal policy

3. Why fiscal policy has a multiplier effect and how this effect is influenced by automatic stabilizers

4. Why a large public debt may be a cause for concern

作业任务 assignments

Finish Macro Lesson 6 Self-Test Questions

存在问题及解决方法 Problems and solutions

1. Transfer Payments. Students sometimes don’t understand why transfer payments are discussed separately from government spending on goods and services. Explain that transfer payments are different from other forms of government spending. Transfer payments are not in direct exchange for any goods or services received by the government.

2. Different Multipliers. Students don’t immediately understand why the multiplier effect associated with a change in taxes or transfer payments is smaller than the multiplier effect associated with an equivalent change in government spending. Explain to them that since the MPC is less than 1, the size of the multiplier effect associated with a change in either transfer payments or taxes is smaller than the multiplier effect associated with a change in government spending because in the first round of spending, part of the change in taxes or transfers is absorbed by savings.

3. Balancing the Federal Budget. Students mistakenly think that the government budget must be balanced each year by law. Explain that while there have been attempts in the past to pass legislation requiring the federal government to balance the budget each year, no such law exists in fact.

4. Deficit versus Debt. Emphasize that the two terms are indeed different measures. Specifically, the deficit is the difference between what the government spends and the amount it receives in tax revenue in a given period. By contrast, the debt is a cumulative measure, indicating the sum of money that the government owes at a particular point in time.