12. Fiscal Policy

• Fiscal Policy
• What is Fiscal Policy?
• The Effect on GDP of an Increase in Government Spending
• The Effect on GDP of a Decrease in Taxes
• The Balanced Budget Multiplier
• A Contractionary Gap Can be Closed by Expansionary Fiscal Policy
• An Expansionary Gap Can be Closed by Contractionary Fiscal Policy
• Fiscal Policy in Practice
• Introduction
• The Great Depression and World War II
• Automatic Stabilizers
• The Golden Age of Keynesian Fiscal Policy to Stagflation
• Fiscal Policy and the Natural Rate of Unemployment
• Lags in Fiscal Policy
• Discretionary Policy and Permanent Income
• Feedback Effects of Fiscal Policy on Aggregate Supply
• The Budget Deficits of the 1980s and 1990s
• Appendix: The Government Expenditures and Tax Multipliers
• Appendix: The Government Multiplier with Income Taxes
• Appendix: The Multiplier with Income Taxes and Variable Imports