Ch 10: Fiscal & Monetary Policies in Economics

About This Chapter

Watch our video lessons and gain an understanding of how fiscal and monetary policies work in economics. Get information on timing, stabilizers, policy tools and economic stabilizers.

Fiscal & Monetary Policies in Economics - Chapter Summary

This chapter's lessons examine fiscal and monetary policies, starting with a look at John Maynard Keynes and how he influenced economic thought. Our instructors will present an overview of basic economic tools and discuss types of fiscal policies, such as expansionary and contractionary. You'll see how fiscal policy can affect the unemployment rate.

Other lessons present examples of automatic economic stabilizers and monetary policies that boost the economy. You'll learn what supply-side economics is and look at how to use fiscal and monetary policy in real-life situations. After finishing these lessons, you should be able to:

  • Describe the Keynesian view of fiscal policy
  • Explain expansionary and contractionary fiscal policy
  • Understand the progressive nature of tax codes
  • Report how monetary policy can speed up or slow down economic growth
  • Analyze fiscal and monetary policies favored by supply-side economists
  • Show how Keynesian fiscal and monetary approaches can be used in the real world

Our instructors, all experts in the field, make these brief lessons both informative and lively. At the end of each lesson is a quiz so you can assess your knowledge. If you need further review, video tags allow you to hop back to the right spot in the video without having to re-watch the entire lesson. If you still have questions, you can contact the instructor.

14 Lessons in Chapter 10: Fiscal & Monetary Policies in Economics
Test your knowledge with a 30-question chapter practice test
Fiscal Policy: The Keynesian Revolution

1. Fiscal Policy: The Keynesian Revolution

In this lesson, you'll learn how the government uses stabilization policy to smooth out the ups and downs of the business cycles. In stark opposition to the Classical approach, this Keynesian approach favors taking immediate action to stabilize a troubled economy.

Fiscal Policy Tools: Government Spending and Taxes

2. Fiscal Policy Tools: Government Spending and Taxes

Discover the three main tools the government uses to address recessionary and inflationary economies - what economists call fiscal policy. Find out how these tools are used to help the economy in different situations.

Expansionary Fiscal Policy and Aggregate Demand

3. Expansionary Fiscal Policy and Aggregate Demand

In the 21st century, the realities of a recessionary economy are more vivid than many of us would probably like. In this lesson, you'll learn how the government uses expansionary policy to offset recessionary gaps using real-world examples.

Contractionary Fiscal Policy and Aggregate Demand

4. Contractionary Fiscal Policy and Aggregate Demand

This lesson examines how fiscal authorities use contractionary fiscal policy to slow down the economy and defeat the enemy called inflation. Find out what fiscal tools the federal authorities can use to contract the economy.

Fiscal Policy and the Effects on Unemployment

5. Fiscal Policy and the Effects on Unemployment

Review what fiscal policy is and how the two key components of fiscal policy can be used to influence unemployment. Find out when and how fiscal policy can be used and why it is so important.

Understanding the Progressive Tax Code

6. Understanding the Progressive Tax Code

In this lesson, learn what a progressive tax code is, how to recognize it, and what the alternatives are. Then, learn the differences between the three tax codes: progressive, regressive and proportional. Finally, learn how sales tax would impact progressivity.

Automatic Stabilizers in Economics: Definition & Examples

7. Automatic Stabilizers in Economics: Definition & Examples

Watch this lesson to learn about the features that are built into the tax code and the government's budget that help offset declines in aggregate demand during recessions. Referred to as automatic stabilizers, they also address the needs of individuals facing hard times.

Expansionary Monetary Policy: Helping the Economy Grow

8. Expansionary Monetary Policy: Helping the Economy Grow

In this lesson, you'll learn how the central bank helps the economy grow during recessions by increasing the size of the money supply. An overview of the three tools of monetary policy are included as well as the reasons why monetary policy leads to higher economic output.

Contractionary Monetary Policy: Slowing the Economy Down

9. Contractionary Monetary Policy: Slowing the Economy Down

In this lesson, you'll find out more about the central bank's efforts to deal with an overheating economy, what economists call 'contractionary monetary policy.'

The Importance of Timing in Fiscal and Monetary Policy Decisions

10. The Importance of Timing in Fiscal and Monetary Policy Decisions

In this lesson, discover four different types of policy lags that occur when fiscal and monetary authorities take action in attempt to influence economic output. Find out which policy has less of a time lag.

Supply-Side Economics in Fiscal and Monetary Policy

11. Supply-Side Economics in Fiscal and Monetary Policy

This lesson explains what supply-side economics is, where it started, and how economists illustrate it. It provides a basic overview of the still-controversial theory that was popularized by President Ronald Reagan during the 1980s.

Short-Term GDP and National Debt: Keynes' Theory

12. Short-Term GDP and National Debt: Keynes' Theory

Discover the tension fiscal authorities face between the two equally rewarding goals of reducing the national debt and maintaining a growing economy in the short term. This lesson explains the tension from the Keynesian point of view.

Managing the Economy with Fiscal and Monetary Policies

13. Managing the Economy with Fiscal and Monetary Policies

Learn what fiscal and monetary policy are and how they are used to manage the economy. Find out the goals of these policies and some of the tools that each use to help you find a job and influence the amount of money in your pocket.

What is a Market Economy? - Definition, Advantages, Disadvantages & Examples

14. What is a Market Economy? - Definition, Advantages, Disadvantages & Examples

We live in a market economy where our well-being and quality of life are largely determined by how well we interact in it. In this lesson, you'll learn about the market economy including its advantages and disadvantages. A short quiz follows.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
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Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
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