AP ECONOMICS: October 15 Warm-up From memory, draw three LRAS-AD-AS graphs showing the three basic situations of which the economy can be operating.

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Presentation transcript:

AP ECONOMICS: October 15 Warm-up From memory, draw three LRAS-AD-AS graphs showing the three basic situations of which the economy can be operating. Then, on two of the graphs, shift the AD curve to close the gaps. A.P. Economics Learning Target In order to understand how public policy can impact the economy’s output, price level, and level of unemployment, I will analyze the impact of fiscal policy on AD. I will know I have it when I can: (1) list and explain the fiscal policy tools (taxation, transfer payments, and government spending); (2) show the impact of fiscal policy in the LRAS-AD-AS Model; (3) determine fiscal policy (if any) needed to address economic scenarios; and (4) analyze the impact of fiscal policy on the federal budget and the national debt. --Closing the gaps using AD-side fiscal policy (see Key Concepts HO) -recessionary and inflationary gaps—appropriate fiscal policy? -Act. 5-1 (HO): ·basic tools (to include transfer payments) ·deficit vs. debt terminology and calculations; debt financing; implications? -policy dilemma from stagflation Assignment Read Module 21; GC videos Quiz over fiscal policy, long-run equilibrium & gaps on Wednesday FRQ #5 (over Key Concepts) Friday; MCT #3 next Monday