This lesson covers Topics 3.8-3.9 in the AP Syllabus. Today we will study the policies favored by Keynesians to stabilize the macroeconomy. We will also learn about the multiplier effect.
Learning Target
Use current data to explain the influence of changes in spending, production, and the money supply on various economic conditions.
Use economic indicators to analyze the current and future state of the economy.
Criteria for Success
I will be able to use ideas related to the AS-AD model to analyze economic problems.
I will be able to demonstrate this understanding using a graph of the aforementioned model.
Read: Krugman (Modules 20 and 21)
Watch: The video lecture for today's topic (linked above).
Optional: The videos linked below.
Formative Assessment (MCQ's): You will take a formal assessment during class. The assessment will consist of multiple-choice questions and one FRQ from an old AP Exam. Doing the problem of the day and ensuring that you understand it will help you prepare for today's formative assessment and help to ensure that you understand the concepts in this lesson.
Problem of the Day:
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?).