Fiscal Policy Project:  Exercise and Essay


In this project, you will

  • Assess an economic situation,
  • Determine a specific economic goal
  • Develop a fiscal policy to address that goal. 
  • Evaluate the likely impact of that policy on macroeconomic outcomes.
  • Write an essay presenting your policy.
  Step 1: The Economic Situation 

I have written a description of an economic situation which is largely based on the current economy in California.  You will review it and try to determine:

(1) What stage in the business cycle are we?  (contraction, recovery, expansion; if in contraction, is it a recession or a growth recession) 

(2)  How much of which type of unemployment do we have?  (frictional, structural, cyclical)

(3) What is happening with the price level?  (current changes in CPI, as well as future indications -- e.g., the PPI)

(4) What is happening to the level of investment and the  stock of capital? 

There is a short multiple choice (Fiscal policy Situation in the quiz icon) set up to help you answer these questions.  You will get 10 points for doing these questions.

Step 2:  The Analysis Worksheet

  You will complete this worksheet and turn it into the assignment drop box before July .  I will review it and return it to you. 

Step 3:  The Essay

   You will write a short essay proposing your policy and discussing its effects.  The essay closely follows the worksheet.