Suppose that survey measures of consumer confidence indicate a wave of pessimism is sweeping the country. If policymakers do nothing, what will happen to aggregate demand? What should the Fed do if it wants to stabilize aggregate demand? If the Fed does nothing, what might Congress do to stabilize aggregate demand?

Start with a brief introduction that explains use of Government policy to control the economy. When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy? Look at both. When is it inappropriate to use monetary and fiscal policy to stimulate or stabilize the economy? Look at both. What specific fiscal policy tools would you use to stimulate aggregate demand and how? What specific monetary policy tools would you use to stimulate aggregate demand and how? What is your conclusion, should policymakers use the monetary and or fiscal policy, or a combination of both, to stimulate aggregate demand? Explain your reasoning.

If there is a decrease in inflation what happens to aggregate supply. Aggregate demand would shift downwards because it would fall but would supply be affected by this? With this shift in inflation and the decrease in demand what would policy makers do in response to this?

Compare and contrast the classical and Keynesian views of aggregate demand and aggregate supply.

What is supply-side economics? Does it oppose the Classical, Keynesian, or Monetarist theory? How does supply-side economics affect fiscal policy?

In 2006, the U.S. economy experienced an inflationary gap when the economy was booming and the unemployment rate was low. Would you consider a tax increase in that period to be demand-side focused, supply-side focused or both? What would be the impact of this policy on the price level and the real GDP? Explain.

What effect will a successful supply-side policy have on the aggregate demand curve?     A) Leftward shift B) Rightward shift C) Movement down along D) Movement up along

You are hired by the Bureau of Economic Analogies (BEA) as an economic consultant. The chairperson of the BEA tells you that he believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. He wants to know what policy to pursue to increase aggregate output by $700 billion. The best estimate he has for the MPC is 0.8. Which of the following policies should you recommend? Select one: a. increase government spending by $700 billion and taxes by $600 billion b. reduce government spending by $350 billion and reduce taxes by $250 billion c. increase government spending by $350 billion and reduce taxes by $700 billion d. increase both government spending and taxes by $700 billion

Fiscal Policy is conducted by:______________________, and Monetary Policy is conducted by:_______________________.                                         The Fed                                       Congress and the President

In February 2021, retail sales fell by 3.3% compared to January. What does the drop in retail sales indicate about how consumption has changed? Investment spending fell by 2.2% in February. How will these changes affect aggregate expenditures? How will equilibrium GDP be affected? How do you think the stimulus checks that many Americans will receive will affect consumption? How will that affect aggregate expenditures and GDP and employment? Do you expect the change in aggregate expenditures be temporary or permanent? Part of the stimulus package passed by Biden includes an extra $300 per week in unemployment benefits.  Do you agree with the stimulus checks and additional $300 per week in unemployment benefits? Why or why not?