The Role of Fiscal Policy in the Economy

The two articles for discussion in the Week 6 Video & Resources on page 2. If you have not read them yet, please read them now before posting

Fiscal Policy: Economic Effects

https://sgp.fas.org/crs/misc/R45723.pdf

Fiscal Policy: Taking and Giving Away - Back to Basics: Finance & Development

https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Fiscal-Policy

Questions

In your initial response to the topic, you have to answer all questions:

1. Discuss the effect of fiscal policy on interest rates and investment. Explain the crowding out effect.
2. Discuss the effect of fiscal policy on inflation.
3. Discuss the effect of persistent fiscal stimulus on the economy in the long run.
4. Describe the mechanism of how changes in fiscal policy affect output and prices in the economy.
5. Reflection: the students should also include a paragraph in the initial response in their own words, using macroeconomic terminology, reflecting on what they learned from the assignment and how they think they could apply what they learned in the workplace or in everyday life.