Opportunities for Discussion

1. What are some of the concerns beyond those of fiscal policy on which the government bases its spending and taxation decisions?

2. Why doesn't an increase in aggregate demand translate directly into an increase in real GDP?

3. In what ways do the methods that the government chooses to finance its spending influence the impact of fiscal policy?

4. Why might the public ignore future tax liabilities when making spending decisions?

5. In what ways does the composition of government spending in a typical developing country differ from that of an industrial country?