Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971509
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 21, Problem 4QR
To determine

Pessimism and aggregate demand.

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Suppose that survey measures of consumer confidence indicates a wave of pressimism is sweeping the country. If policy maker do nothing, what will happen to aggregate demand? What should the fed do of it wants to stabilize the aggregate demand? If fed does nothing then what congress should do to stabilize the aggregate demand?
Suppose that consumers become pessimistic about the future health of the economy. What will happen to aggregate demand and to output? What might the president and Congress have to do to keep output stable?  What might the Federal Reserve do?
A stimulative monetary or fiscal action should increase aggregate demand. What factors may limit the actual increase in aggregate demand?
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