Disussion Assignment

Fiscal Policy

The U.S. Congress debates a new budget every fiscal year. Most Republicans want to

reduce federal spending; most Democrats do not want to reduce spending and may, in

some cases, seek to increase it. Choose a perspective, and in your post identify three

reasons that the United States should currently seek to decrease or increase federal

spending. In your rationale, be sure to reflect on the impact of government spending on

GDP and national income. Draw on the course readings and your own research to support

your assertions. Be sure to use APA format to cite sources.

Use the course readings and your own research to support your arguments and use APA

guidelines for citations and references. Please remember to be respectful at all times.

Support your post with the theories presented in the unit readings and resources, using

proper APA formatted citations and references.

Resources

Discussion Participation Scoring Guide.

Macroeconomics Models and Fiscal Policy

INTRODUCTION

This unit examines the basic relationships between different economic aggregates—

specifically, income and consumption, investment and interest rates—and how output is

affected by increases or decreases in spending. It is important to understand the

determination of Gross National Product (GDP), given its production capacity. It is also

important to understand why GDP increases in one period and declines in another. To

address these questions, the Aggregate Expenditure and the Aggregate Demand and

Supply models are analyzed. Finally, in this unit we examine the role of fiscal policy in

stimulating full employment and economic growth as well as controlling inflation.

OBJECTIVES

To successfully complete this learning unit, you will be expected to:

1. Develop greater understanding of different economic aggregates.

2. Examine the role of fiscal policy as a tool to stimulate economic growth and

control inflation.

3. Analyze the impact of government spending on GDP and national income.

• Readings

Use your Macroeconomics text to complete the following:

1. Read Chapter 10, "Basic Macroeconomic Relationships," pages 218–236.

2. Read Chapter 11, "The Aggregate Expenditures Model," pages 239–259.

3. Read Chapter 12, "Aggregate Demand and Aggregate Supply," pages 263–

282, and pages 285–287.

4. Read Chapter 13, "Fiscal Policy, Deficits, and Debt," pages 288–308.