Fiscal Policy

1. Describe the current state of the U.S. economy in terms of major macroeconomic indicators – GDP growth, inflation, employment. Explain in what areas the economy are doing well and in which places improvement is needed. Is GDP an accurate measure of well-being? Is unemployment rate an accurate measure of the state of the labor market? What other indicators would you find useful in assessing the state of the economy?

2. What fiscal policy measures has the government adopted in the last two years? How are these measures expected to affect aggregate demand and supply, and impact the major macroeconomic goals – steady GDP growth, price stability, full employment? Are these expansionary or contractionary measures? Do they potentially lead to higher or lower budget deficit and national debt? 

3. Explain the most recent monetary policy move by the Fed. Is this expansionary or contractionary policy? Why did the Fed choose to pursue this policy? What impacts of this policy do you observe? For best results, look up recent FOMC announcements.

4. Suggest one specific policy that you would consider implementing if you were running for president. Justify your choice, given current state of the economy. How will your policy affect GDP growth, price levels, employment and budget deficit?