Macro Economics

A significant decrease in aggregate demand in the U.S. economy has created a serious recession. Propose a specific single fiscal policy to assist in the recovery to full employment. Explain how your policy will work to improve conditions. Identify each step in the process including what happens to spending, output, and prices and employment. Identify the policy’s possible weaknesses. How will you know that your policy worked? Within your analysis, be sure to explain why your recommendation is better than alternative fiscal policies. Be clear about how alternative fiscal policies work in comparison to your recommended policy. Why would your recommendation be superior to a monetary policy recommendation? Or would it? Within your answer, make sure that you include a discussion of the costs and benefits of your fiscal policy in the short and long runs.





























Sample Solution