Key Takeaways
Lesson Description
Key Takeaways
• Fiscal policy uses government spending and taxation to influence aggregate demand.
• Monetary policy changes interest rates and the money supply to stabilize the economy.
• Expansionary policies increase output during recessions.
• Contractionary policies reduce inflation during economic booms.
• The Phillips Curve illustrates the short-run relationship between inflation and unemployment.
Must Know Models
Phillips Curve
AD-AS Model
Must Know Vocabulary
Expansionary Fiscal Policy
Contractionary Fiscal Policy
Expansionary Monetary Policy
Contractionary Monetary Policy
Crowding Out
Budget Deficit
Budget Surplus
National Debt
Phillips Curve
AP Exam Focus
• Determine appropriate stabilization policies.
• Explain fiscal and monetary policy effects on AD.
• Interpret the Phillips Curve.