Explain whether the federal government should use contractionary or expansionary fiscal policy and why.

Module 7: Fiscal Policy and Keynesian Framework and Inflationary and Recessionary Gaps. (Macroeconomics Written Assignment) Now that you have gained a good grasp of macroeconomic concepts in class, you will apply your knowledge to analyze the United States. Using the understanding of supply and demand gained this week, you will expand your knowledge of changes in market equilibrium and the concepts of price ceilings and price floors. Locate a recent article or event (published within the last year) that highlights your selected macroeconomic topic. Use the Hunt Library, newspapers, new stations, or other credible sources to discuss how your topic aligns with macroeconomics. Include the following in your document. • State the article or event selected. • Identify fiscal policy tools used by the federal government. Explain whether the federal government should use contractionary or expansionary fiscal policy and why. • How does aggregate supply (AS) differ from aggregate demand (AD)? Can you explain how you would note whether the United States is in the short or long run as it pertains to the AD/AS model? • State whether the United States is in an inflationary or recessionary gap. Identify which determinants of aggregate demand and/or aggregate supply have overcorrected our economy. Or do you believe the United States is at its long-run equilibrium? • What steps need to be taken by the federal government to move our economy back to long-run equilibrium? Can you explain whether the United States will be stuck with higher price levels now and in the future?

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