What Is Fiscal Policy?
Types of Fiscal Policy
Expansionary Fiscal Policy (To Close a Recessionary Gap)
Expansionary fiscal policy: G↑ or T↓ → AD shifts right → closes recessionary gap
Contractionary Fiscal Policy (To Close an Inflationary Gap)
Using Multipliers to Calculate Required Policy
Spending Change Needed
Tax Change Needed
Worked Example
Automatic Stabilizers
Discretionary vs. Automatic Policy
Problems with Fiscal Policy
Time Lags
Political Constraints
Crowding Out (Preview)
Budget Deficit and Surplus
AP Exam Tips
Common Mistakes