Last class we learned about Keynesian fiscal policy. Supply-side economists do not agree with the remedies employed by Keynesians. Today we will analyze economic fluctuations the perspective of supply-siders and examine the alternatives they offer to Keynesian policy. You should have read the text chapter identified below in the homework section and watched the related videos. We will start class today with you working cooperatively with a partner to find a solution to the "Problem of the Day" and then there will be a lecture on our next topic. This page contains all the information you need for today's class: homework, the problem of the day, helpful resources (videos, podcasts, etc.) and an explanation of the activities we will do in class. Use the table of contents on the right to help you navigate.
Read Mankiw (Chapter 34). Watch the following videos too.
Problem of the Day: You will work cooperatively with your partner to construct a response to the following prompt.
Define the following terms: unemployment and fiscal policy.
Explain why Keynesians believe that recessions begin and persist and why fiscal policy is necessary in remedying them.
Use the ideas of neoclassical economists (Monetarists) and classical economists (Austrians) to evaluate the theory you explained in #2 (is it right or wrong?).
Lecture
Ted Talks
Related Readings
Crowding-in: In this blog post Paul Krugman argues that the crowding-out effect applies at full-employment but is reversed during recessions. He argues that expansionary fiscal policy actually increases investment (crowding-in) during economic contractions.
An Emissions Plan Conservatives Could Warm To by Arthur Laffer
Videos
Keynes-Hayek Raps: These are fun.