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ECN 206 Grantham University Fiscal Policy Discussion

I’m studying for my Economics class and don’t understand how to answer this. Can you help me study?

When the economy is in a  recessionary mode, aggregate demand shifting inward is often the  culprit.  Deflationary pressures on prices ensue, and output falls,  causing problems like higher unemployment and contraction of the  economy.   

When  the economy is in a recessionary mode, what will likely be the actions  by government using fiscal policy?  Is it better to concentrate on  aggregate demand or aggregate supply?  Why?  

Review  how and why aggregate demand and aggregate supply shift inward and  outward.  English economist John Maynard Keynes developed a model that  provides an explanation for the high and prolonged rate of unemployment  of the Great Depression.  According to Keynes, what are the major  sources of economic instability?  Fiscal policy is spending and taxation  of the executive branch of the federal government; in recessionary  times, what initiatives in spending and/or taxation are going to help  the economy? 

aalan

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