Economics: Unit Six Portfolio (31 points)

You may edit based on my feedback and resubmit these portfolios for improved scores.

Please responses after each question.You may use a different color font for your responses, if you wish.

I. Fiscal Policy: Taxes and Spending

What is the largest source of revenue for the federal government?About what percent of revenues is this source?

What is the difference between the national debt and a budget deficit?

Explain the impact of a budget deficit on national debt.

Explain how government spending can increase GDP.(Hint: Consider the formula for the Expenditure Approach to calculating GDP.)

Give one example of a government regulation improving market efficiency. (e.g. dealing with market failure)

Give one example of a government regulation harming market efficiency.(e.g. instances of regulatory capture or price controls)

II. Federal Reserve and Monetary Policy

Explain the several processes by which the Federal Reserve can increase or decrease the money supply.

What is the prime interest rate?How does this impact other interest rates?How does this impact the money supply?

Explain the steps that the Federal Reserve should take if it wanted to do the following:

Decrease the unemployment rate:

Increase overall output:

Decrease borrowing/tighten credit:

III. Policy Perspectives

Often, fiscal and monetary decisions are driven by political considerations.For this section, choose one fiscal policy (i.e. any decisions that have to with taxes or gov't spending) to examine.Be specific - e.g. talk about raising income taxes on high-earners, or lowering import tariffs, not just "taxes."

For each policy, say 1) what a conservative position on this policy would be, 2) what a liberal position on this policy would be, and 3) what your own position on policy is, and why.

Policy Issue:

Conservative position on this issue (explain!):

Liberal position on this issue (explain!):

Your views on this issue (justify using economic concepts!)