Watch the first video, from Khan Academy, which discusses the tax lever of fiscal policy. After you’re done, watch Phil Holden discus fiscal policy and automatic stabilizers. Discretionary fiscal policy is how the executive and legislative branches exercise their choice of increasing or decreasing taxes or spending to attain economic stability. Automatic stabilizers are the non-discretionary occurrences that mitigate fluctuations in GDP. When that happens, the government automatically gains increases in revenues as a consequence of economic expansions.

Then share your thoughts with your classmates by writing a short blog post. Remember to tag (WordPress) or label (Blogger) your blog post using the course tag: maec101 Do these different fiscal policy interactions make sense? Can you think of examples of your local government using them? Sharing with classmates can be a valuable way to clear up your own thoughts and get help from other learners.