Course: Principles of Macroeconomics (ECON 2) · Silver Oak University (fictional sample) · Prof. Ashford
Focus: Fiscal Policy — Spending, Taxes, the Multiplier & the Deficit vs. the Debt · Objective 6 · SLO A & B

📋 Module Overview Page — "Start Here" (Canvas: Page, published)

Week 7 — Fiscal Policy: How Government Spending & Taxes Move the Whole Economy

Last week you learned to spot a recessionary or an inflationary gap on the AD–AS diagram. This week you learn the first policy lever economists reach for to try to close one: fiscal policy — the government's own spending and taxing decisions. You'll meet the famous spending multiplier, see why a single dollar of government spending can ripple into several dollars of total output, and learn the crucial difference between a deficit (one year's shortfall — a flow) and the national debt (everything ever borrowed and not yet repaid — a stock). This is also the term's flagship evenhandedness week: the case for stimulus and the case for caution get equal airtime, on purpose.

The big question: When the government changes how much it spends or taxes, how much does that ripple through the whole economy — and what's the honest case on both sides of "stimulus vs. austerity"?

By the end of this week, you can:

• distinguish expansionary from contractionary fiscal policy (which direction G and taxes move, and why);
• apply the spending multiplier, 1/(1−MPC), to compute how a change in government spending ripples into a (larger) change in output — and state the one-line tax-multiplier nod;
• explain automatic stabilizers — the parts of fiscal policy that kick in without Congress voting on anything;
• tell a deficit (a flow, this year's shortfall) from the debt (a stock, the accumulated total) — and state the fair case for and against crowding-out concerns.

Do this, in order:

1. Read & watch — the Week 7 resources (≈35 min). → Readings & Resources page
2. Lecture Tutorial — work through fiscal policy, the multiplier & deficits/debt with your AI tutor (≈45 min). Due Sun, Oct 18. → submit the chat share link + summary
3. Practice Exercises — 6 quick reps, ungraded (≈15 min).
4. Quiz 7 — 10 questions, closed to AI (≈20 min). Due Sun, Oct 18.
5. Discussion 7 — "Stimulus or Austerity in a Recession?" Initial post Fri, Oct 16, replies Sun, Oct 18.
6. Assignment 7 — the multiplier, automatic-stabilizers & deficit/debt problem set (100 pts). Due Sun, Oct 18.
7. Workshop 7 — Graph & Model Workshop — "The Spending Multiplier": trace the rounds of spending round by round and compare to 1/(1−MPC) (50 pts). Due Sun, Oct 18.

A note before you start: fiscal policy is where macroeconomics gets political — but our job this week is to keep the economics honest on both sides. Every number is pre-computed and verified, every curve-shift direction follows the canon, and every contested policy question — Keynesian multiplier logic vs. crowding-out/debt/lags worries — gets the strongest version of both arguments, with no verdict handed down. You've got this. 💪

📣 Welcome Announcement (Canvas: Announcement; available_from_offset_days = 0 — posts Mon, Oct 12)

Subject: Welcome to Week 7 — Can government spending pull an economy out of a slump? 👋

Hi everyone, and welcome to Week 7!

Here's the whole week in one sentence: when the government spends an extra dollar, that dollar doesn't just sit there — it gets re-spent, and re-spent again, so the total effect on output can be several times the original dollar; that ripple is the "multiplier," and how big it is (and whether it's worth what it costs) is one of the most contested questions in all of economics.

This week, don't miss:

• The spending multiplier, 1/(1−MPC) — one clean formula that says exactly how much a $20 billion boost in government spending can turn into a much larger change in total output.
• Deficit vs. debt — a distinction the news blurs constantly. A deficit is this year's gap between spending and revenue (a flow); the debt is the running total of every past deficit, unpaid (a stock). Get this straight and half the cable-news arguments about "the budget" get a lot clearer.
• Our flagship evenhandedness week. The Keynesian case for using fiscal policy to fight a recession, and the classical/monetarist case for caution (crowding-out, lags, the growing debt) both get the strongest fair hearing we can give them — no verdict from me or from any AI tool this week.

Start with the Module Overview ("Start Here"), then the readings, then your AI Lecture Tutorial. Bring a question to class — especially if you're not sure yet which side of "stimulus vs. austerity" you find more persuasive; that's exactly the right place to start Thursday's discussion.

See you in class,
Prof. Ashford