Think about how Fiscal Policy and Government Debt are related. Follow the steps below to create a FRED® graph and answer the questions that follow.
1. Go to https://fred.stlouisfed.org/.
2. Search for “Federal Surplus or Deficit [-] as Percent of Gross Domestic Product” by copying and pasting this series ID: FYFSGDA188S into the Search box. The gray bars in the graph represent recessions.
3. Click on “Share Links” on the bottom left of your graph and select “Image Short URL.” Copy the URL that appears in the pop-up window and paste it in your response to the discussion board activity.
Answer these questions:
What is the URL for the graph you created?
Why is the value of the federal surplus or deficit divided by the value of GDP? How does that help better tell the story behind the numbers?”
When were the two lowest dips? Provide year and percentage of GDP for each one. What was happening in the country during each of these periods?
Generally speaking, what is the basic macroeconomic objective for implementing fiscal policy in an economy?
Looking at your graph, has fiscal policy been used during periods of recession? Expansion? Both? Explain.
“Removing fiscal and monetary policies that have been supporting the economy means that the economy is healthier.” Do you agree with this statement? Explain your answer using course content and your own normative analysis.
Based on your graph and your answers, would you say that the U.S. has mostly used fiscal policy appropriately according to the basic macroeconomic objective for implementing it (as you defined that to be above)?