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FINANCIAL MARKET COURSES

Macroeconomics – Fiscal Policy

Fiscal policy is concerned with changes in government expenditure and taxation, with the primary objective of stabilizing the economy at an acceptable level of economic activity. This course describes the fundamentals of fiscal policy, the overall stance of which can be described by a government’s budget deficit policy. It covers the calculation of the budget deficit, and analyzes the role played by automatic fiscal stabilizers in addition to discretionary fiscal policy. The course also looks at how fiscal policy has fallen out of favor in recent years, with the economics mainstream promoting activist monetary policy as a more effective stabilization tool.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Outline the basic function of fiscal policy and the difference between induced and discretionary changes in the budget deficit

    Describe the theoretical effect of both automatic fiscal stabilizers and discretionary fiscal policy on GDP

    Explain how the budget deficit is financed and the impact of this financing on interest rates

    Cite the reasons why monetary policy is generally considered to be a better economic stabilization tool than fiscal policy

  • PROGRAM CONTENT

    Lesson(s):

    Topic 1: Fundamentals of Fiscal Policy

    What is Fiscal Policy?

    Expansionary & Contractionary Fiscal Policy

    Budget Deficit – Induced Changes

    Budget Deficit – Discretionary Changes

    Topic 2: Fiscal Policy & GDP

    Equilibrium GDP

    Automatic Stabilizers

    Discretionary Fiscal Policy

    Topic 3: Effectiveness of Fiscal Policy

    Fiscal Policy – A Historic Perspective

    Fiscal Policy – The Case Against

    Reduction of Multiplier Effect

    Fiscal Expansions May Actuallu Be Contractionary

    Fiscal Policy Lags

    Fiscal Policy & Political Issues

    Does Fiscal Policy Still Have A Role to Play?

    Topic 4: Financing the Budget Deficit

    Financing the Deficit

    Government Borrowing

    Crowding-Out

    Savings

    Savings & Equilibrium GDP

    Increasing Equilibrium GDP

    Stabilizing Equilibrium GDP

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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