1. Fiscal Policy

2. Output gaps in selected countries: 1980-2003

3. Output gaps in selected countries: 1980-2003UK

4. Output gaps in selected countries: 1980-2003
USA UK

5. Output gaps in selected countries: 1980-2003
USA UK
Germany

6. Output gaps in selected countries: 1980-2003
USA UK
Germany
Japan

7. The business cycle National output Time Potential output Actual output

8. The business cycle National output Time Potential output 3 4 2 Actual1 2 3 4
National output
Actual
output 3 4 2 1 O
Time

9. Fiscal Policy

10. Stabilisation policies
If Ye < Yf, there is a danger of Keynesian unemployment
The authorities should increase aggregate demand by adopting an expansonary fiscal policy by increasing government expenditure (G > 0) or decreasing taxes (T < 0)

11. Stabilisation policies
If Ye > Yf, there is a danger of the economy overheating and inflation may increase
The authorities should reduce aggregate demand by adopting a contractionary fiscal policy by reducing government expenditure (G < 0) or increasing taxes (T > 0)

12. The deflationary gap Y E O Ye YF Y

13. The deflationary gap Y E a
Deflationary gap b O Ye YF Y

14. The deflationary gap Y E Injections Leakages Y a b Deflationary gap cYF Y

15. The inflationary gap Y E O Ye Y

16. The inflationary gap Y E O Ye Y

17. The inflationary gap Y E e
Inflationary gap f O YF Ye Y

18. The inflationary gap Y E Leakages Injections Y e f Inflationary gap gYF Ye Y

19. Real and Money GDP