AP Economics – 2/12/19

I.  Bellwork:  WS 30.3 Q&A

II Objectives:

  • Explain why governments calculate the cyclically adjusted budget balance
  • Identify problems posed by a large public debt
  • Discuss why implicit liabilities of the government are also a cause for concern

III Discussion Pages 293-302

A.  The Budget Balance

  1. The Budget Balance as a Measure of Fiscal Policy

SGovernment = T – G – TR

     2.  The Business Cycle and the Cyclically Adjusted Budget Balance

     3.  Should the Budget Be Balanced?

B.  Long-Run Implications of Fiscal Policy

  1. Deficits, Surpluses, and Debt
  2. Problems Posed by Rising Government Debt
  3. Deficits and Debt in Practice
  4. Implicit Liabilities

IV Notes

V.   Classwork

30.2 WS & 30.4WS


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