Answered: Using the AD/AS Model, construct 2…

Using the AD/AS Model, construct 2 graphs that show how a recession can occur. Explain how discretionary fiscal or monetary policies can be used to move the economy out of recession.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 53CTQ: The AD/AS model is static. It shows a snapshot of the economy at a given point in time. Both...

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Question

Using the AD/AS Model, construct 2 graphs that show how a recession can occur. Explain how discretionary fiscal or monetary policies can be used to move the economy out of recession.

• Using the AD/AS Model, construct 2 graphs that show how higher rates of inflation can occur. Explain how discretionary fiscal or monetary policies can be used to bring down the inflation rate.

• In times of recession what can government do to lessen the economic hardship faced by those who lost their jobs?

Definition Definition Policy implemented by the central bank of a country (such as the Federal Reserve in the United States) to achieve certain macroeconomic objectives. Monetary policy is a supply-side macroeconomic policy that supervises the growth rate and money supply in the economy.

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