1. Define fiscal policy. Include the goals and tools of fiscal policy and the body that controls it. Fiscal Policy known as the use of government revenue to influence macroeconomics. 2. Compare and contrast fiscal and monetary policy. How are they alike and how do they differ? While fiscal policies are generally regarding the collection and spending of money, monetary policies address the interest rates and supply of money being circulated. 3. Should the government create a law mandating a balanced federal budget? Support your position with evidence from the lesson. Yes I personally believe there should be a law in which mandates a financial spending budget to an extent. Although it is a good thing to have a balanced budget, events often occur where more money should be spent in different areas i.e. wars, terrorism, or natural disasters. ___________________________________________________________________________________ Scenario 1: The government is currently spending three billion, one hundred million on programs and brings in three billion, five hundred million through taxation. 4. Does this create a budget surplus or deficit? Explain. This created a budget surplus due to the fact that they made roughly 400 million over the necessary amount. 5. As a member of Congress, what changes would you suggest to fiscal policy to balance the budget? Explain at least two ways you would use the tools of fiscal policy to balance the budget by recommending an "increase" or "decrease" to each tool in your explanation. In certain situations an increase in taxes would be a reasonable answer, however with the information given the taxes were higher than necessary which could cause backlash, leading me to want to decrease government taxation and keep government spending the same as it is. 6. What are the benefits and opportunity costs of the changes you propose? Consider the impact on economic growth, price stability, and unemployment. By decreasing taxes, the government would still have the money to fund said programs, however businesses would keep more revenue which could lead to more promotions, allow more room for employing new members, or further growth in the businesses. ___________________________________________________________________________________________________ Scenario 2: The government is currently spending three billion, seven hundred million on programs and brings in two billion, nine hundred million through taxation. In addition, the nation has experienced a period of rising unemployment. 7. Does this create a budget surplus or deficit? Explain. This scenario would create a MAJOR budget deficit due to the lack of money and the lack of unemployment. 8. As a member of Congress, what changes would you suggest to fiscal policy to balance the budget? Explain at least two ways you would use the tools of fiscal policy to balance the budget by recommending an "increase" or “decrease" to each tool in your explanation. The government would at the minimum decrease all unnecessary government spending's. And if possible decrease taxation as well, however not likely with how major of a gap there is. 9. What are the benefits and opportunity costs of the changes you propose? Consider the impact on economic growth, price stability, and unemployment. By cutting down on government spending's it would help solve issues of governmental debt. 10. How might your efforts to balance the budget conflict with efforts to decrease unemployment, if at all? I do not believe it would effect unemployment. __________________________________________________________________________________________ Scenario 3: The nation is currently experiencing a period of rising prices. Inflation is making consumer goods increasingly difficult to afford as wages have remained constant. 11. As a member of Congress, what changes would you suggest to fiscal policy to balance the budget and indirectly address inflation? Suggest at least two specific changes to revenue and expenditures. A decrease in taxes and an increase in government spending. 12. What are the benefits and opportunity costs of the changes you propose? Consider the impact on economic growth, price stability, and unemployment. I would hope that this decision would help the economy grow better as well as promote economical growth and decrease unemployment. 13. Are the proposed policies contractionary or expansionary? Explain. Expansionary, because they would be used to improve and increase the economy.