Economics · Unit 3: Macroeconomics

EC3.6 — Demand management: fiscal policy

Economics · SL / HL · syllabus-mapped notes

1. EC3.6.1

   Fiscal policy

   Explain fiscal policy through the government’s sources of revenue and types of expenditure, and the resulting budget outcome.

2. EC3.6.2

   Goals of fiscal policy

   Explain the goals of fiscal policy, and how it is used to steer the economy.

3. EC3.6.3

   Expansionary and contractionary fiscal policies in order to close deflationary/recessionary and inflationary gaps

   Evaluate how expansionary and contractionary fiscal policy close a deflationary or inflationary gap.

4. EC3.6.4

   Keynesian multiplier

   Calculate the Keynesian multiplier from the marginal propensities to consume, save, tax and import, and explain what it implies for a change in spending.

5. EC3.6.5

   Effectiveness of fiscal policy

   Evaluate fiscal policy against its constraints and strengths, including the role of automatic stabilizers.