Economists agree that increasing aggregate demand is the most expedient way to get the country out of a recession.
Economists agree that increasing aggregate demand is the most expedient way to get the country out of a recession.
Part 1: Define what is happening in the economy when a country is in an expansionary mode, a recession, and a depression. Which economic indicators do we monitor to ascertain where the economy is in the business cycle.
Part 2:As an economic advisor to the president, suggest 4 ways to increase aggregate demand using the following economic concepts. Make sure you answer in the context of the equation for GDP. All creative ideas are welcome!
The marginal propensity to consume
Return on investment and the interest rate
Fiscal policy, including government spending and taxation
The multiplier
What is the difference between supply-side and demand-side economics? How do the above concepts fit into these definitions? Which do you agree with most as a solution to stimulating growth, and why?
