1. Fiscal Policy and Supply-Side policy By the end of this session, you:By the end of this session, you: –Must know the government’s fiscal rules. –Should understand the difference between the microeconomic effects of fiscal policy and the macroeconomic dimension. –Should understand the effects of non- inflationary growth –Could be able to evaluate limitations of fiscal policy and supply-side policy.

2. Can you remember this? 1.What is a balanced budget? 2.What is the difference between expansionary and contractionary fiscal policy? 3.Use a diagram to show the difference between a cyclical deficit and a cyclical surplus. 4.Explain one example of an automatic stabiliser. 5.Choose two reasons why a budget deficit may pose a problem.

4. The UK Government’s Fiscal Rules The Code for Fiscal Stability:The Code for Fiscal Stability: –What is the golden rule? –What is the sustainable investment rule? –What are stealth taxes? –What is the defining feature of the EU’s Stability and Growth Pact?

5. 18 th November 2011

10. Microeconomic Effects of Fiscal Policy Incentives to workIncentives to work The pattern of demandThe pattern of demand Business investmentBusiness investment

11. Macroeconomic Dimension Discretionary or active fiscal policy?Discretionary or active fiscal policy? Limitations of fiscal policy:Limitations of fiscal policy: –Time lags –Crowding out

12. Fiscal Policy and Supply-Side policy By the end of this session, you:By the end of this session, you: –Must know the government’s fiscal rules. –Should understand the difference between the microeconomic effects of fiscal policy and the macroeconomic dimension. –Should understand the effects of non- inflationary growth –Could be able to evaluate limitations of fiscal policy and supply-side policy.