ECN 202 – Macroeconomic Principles

News Assignment 4: Fiscal Policy

1. Find & turn in an article about using expansionary fiscal policy to ease the recession.
Do you think this action was successful? Why?
2. Immediately after Obama”s inauguration, there was a stimulus package debate in Congress.
Find and turn in an article about this debate. Describe the conservative, liberal, & radical views
about a government stimulus package intended to lessen the effects of recession.
3. Find & turn in an article that discusses the result of the Reagan administration”s tax reductions
during the 1980s.
a. Summarize the article.

b. Did total tax revenues go up or down as a result of the tax cuts?

c. Did deficits increase or decrease during the 1980s? How is this related to the tax cuts?

d. Is the author is conservative, liberal, or radical? Cite a quote supporting your answer.

4. Read this article about the recent Greek economic crisis:
http://www.cnn.com/2010/BUSINESS/02/10/greek.debt.qanda/index.html
a. Write a few paragraphs describing the cause of the crisis, how it affected Europe”s economy,
& what corrections were implemented.
b. How did this crisis affect the U.S. economy”s recovery from recession?

5. This graphic explains tax cuts from a Supply Side and from a Keynesian persective.
tax cuts
a. Do you agree with the descriptions in each rectangle? Do they fit with your work experience
& with your knowledge of human nature? Use specific phrases to explain.
b. The Neoclassical perspective is that the Keynesian AD shift described on the right is short-term (one or two years), while the shift of the AS curve described on the left is long-term (5 years or more). How might this timing change Fiscal Policy decisions?