Fiscal Policy and Aggregate Demand Analyze fiscal policy to address each of the following points: De

Fiscal Policy and Aggregate Demand

Analyze fiscal policy to address each of the following points:

  • Define fiscal policy and explain how it works.
  • Under what conditions would the government choose to implement expansionary fiscal policy?  How does expansionary fiscal policy affect Aggregate Demand?
  • Use an example from U.S. history to illustrate how expansionary fiscal policy affects the economy (output, employment, prices).
  • What are some potential shortcomings of using fiscal policy as a way to manage the economy?


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