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describe fiscal policy, clearly identifying the tools of fiscal policy and the general aim or objectives of fiscal policy

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 Paper Guide to Question 2:

    1. Students must describe fiscal policy, clearly identifying the tools of fiscal policy and the general aim or objectives of fiscal policy

    2. Use and define concepts such as budget, deficit, surplus, debt, crowding-out, revenue and expenditure

    3. Look at trends in government budget over some period, such as Figure 1 and analyze the outcome

    4. What Correlation exist between government revenue, expenditure and debt. distinguish between correlation and causation in answering this question

    5. Interpret the results pointing to arguments for and against the deficit and possible solutions (each student is to write their paper individually, submitting a written paper on Discussion Board).

NOTE: The photocopy paper from Real World Macro should form the basis of your paper. A summary of the issues raised in this paper will get you a long way towards answering the questions.

Students must recognize the relationship between government revenue and spending and deficits. But more importantly generate descriptive and inferential statistics and interpret the results. This is an individual project to be presented at the end of week 12.

Figure 1: Projected Government Spending and Revenue


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