Find one or more articles in the wall street Journal or other business publicati
ID: 2505568 • Letter: F
Question
Find one or more articles in the wall street Journal or other business publications that describe changes in fiscal or monetary policies in the United States. Discuss how these policies relate to the model of aggregate demand and aggregate supply and the issues involved in implementing the policies.
In order to get the points please include the artice you used as a reference to the question can be verified.
Find one or more articles in the wall street Journal or other business publications that describe changes in fiscal or monetary policies in the United States. Discuss how these policies relate to the model of aggregate demand and aggregate supply and the issues involved in implementing the policies. In order to get the points please include the artice you used as a reference to the question can be verified.Explanation / Answer
Basic Keynesian theory suggests that the effect of a change in fiscal policy on real GDP is more than one-for-one. For instance, since government spending is one component of GDP, an increase in government purchases, by putting idle resources to work, boosts income one-for-one when the money is initially spent. In addition to that, though, since consumption is a function of current after-tax income in this framework, households also increase their consumption in line with their higher incomes, multiplying the effect of the initial government spending on GDP. The
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