In class students took a look at the budget balance (surplus or deficit) and saw how fiscal policy affects the budget balance (Government Savings = Taxation - Government Spending - Trade). Remember, different types of fiscal policy (Taxations, Government Spending and Transfers) may have the same effect on the budget balance but not the same effect on the economy.
We also discussed that running a deficit can be good if it eases a recession and increases unemployment.
The class notes are attached and the homework is listed below.
Notes - Fiscal Policy on the Budget Deficit
HW - Study for Quiz - The Financial Sector
Read Module 31/32
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