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Today students will: Warm Up: Think of a rubber band. As you stretch it out, it expands and when you let it go it contracts back to its original size. Now think of our economy—what do you think it means for the economy to expand and contract? How do you think we measure this change? Participate in a role playing activity in order to describe how the government utilizes expansionary and contractionary fiscal policy to impact our economy.
Fiscal Policy Local, State, and National Government Miss Heller
Measuring the Economy • Gross Domestic Product (GDP)—measures the value of all goods and services in a country • Unemployment rate—measures the percentage of people who want a job, but cannot find one • Consumer Price Index—the general level of prices for goods
What can happen… • Inflation—occurs when there is too much money in circulation, leading to an overall rise in prices • Recession—occurs when there is not enough money in circulation, leading to a decline in productivity and higher unemployment
Lesson Description • Purpose: Introduce you to concept of fiscal policy • Procedure: • Students will be divided into groups of 8 • Each group will be assigned one Act of the Play • Once you have your act, “actors/actresses” should choose roles, write and rehearse their own lines based on the script outlines • After the play Discuss how this ties in with our new economic vocabulary.
Act 1: The Tax Cut Economy is in Recession Tax cut More money in circulation Increased consumer spending and investment Rising GDP & falling unemployment Act 2: Decreased Government Spending Inflation/Price Increases Decreased spending on government programs Less $$$ in circulation Less consumer spending Wages and prices decline Debriefing the Activity Fiscal Policy:Involves the use of taxing and spending to influence the economy Changes in federal government spending/taxation designed to promote full employment, price stability, and economic growth. (page 567 in text)
Extension Activity/Challenge • Write an additional act for the Fiscal Policy Play—Titles/Topics might include one of the following: • “Expansionary FP: Increase Government Spending” • “Contractionary FP: The Tax Increase” • Be sure your Act… • …is Creative. • …accurately demonstrates expansionary or contractionary policy. • …includes at least 7 roles. • …is complete and turned in by Monday/Tuesday of next week.
Assessment Item (SR) • Which of these best reflects how the federal government manages the economy through fiscal policy? • taxing and spending • buying and selling securities • controlling the money supply • controlling interest rates
Assessment Items (SR) • Look at the cartoon below. Then answer the following: Which of these best represents the opinion of the cartoonist? • Rates of inflation are low. • Effects of inflation are unnoticeable. • Actions needed to control inflation are unnecessary. • Actions taken to control inflation are ineffective.
Learning Log: Read the following Newspaper headline carefully: Government to Hire Workers to Repair Roads, Increase Spending to Fight Unemployment • How would the government actions described in this headline impact unemployment? • Use specific examples and details to support your response.