1. AP ECONOMICS: October 16
Warm-up How would government economic policymakers use the fiscal policy tools if the economy is experiencing: (1) a recessionary gap; and (2) an inflationary gap. A.P. Economics Learning Target #1 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, given an economic scenario: (1) determine the fiscal policy needed (if any) to address the situation; and (2 distinguish between discretionary and automatic fiscal policy. --Act. 5-2: discretionary vs. automatic fiscal policy (HO) A.P. Economics Learning Target #2
In order to understand how equilibrium national output and price level are determined, I will analyze the impact of the multiplier effect. I will know I have it when I can: (1) explain how an initial change in spending leads to many additional rounds of spending; (2) calculate the spending and taxation/ transfer multipliers. --Marginal Propensity to Consume (MPC); Marginal Propensity to Save (MPS); MPC + MPS = 1; Spending Multiplier (1/MPS); Taxation and Transfer Multipliers (MPC/MPS) (always 1 less than the spending multiplier)
TOMORROW: quiz on fiscal policy, long-run equilibrium & gaps FRIDAY: FRQ #4 over the Key Concepts HO (HO from Monday) Monday: MCT #3