Expansionary Fiscal Policy: AD and AS Curves

Related BrainMass Solutions

• AD/AS, IS/LM, Keynesian Cross, Money Mkts. & fiscal policy.

  Fiscal policy and monetary policy are thought of as AD policies though AS policies exist as well.

• AD/AS as a framework for fiscal and monetary policies

  Expansionary fiscal policy such as tax cuts or increased government spending shift the AD curve to the right.

• Discuss expansionary and contractionary monetary policies.

  As with the expansionary fiscal policy example above this increases output, lowers unemployment, and creates economic growth. when the economy is sluggish the Fed tends to pursue expansionary monetary policy.

• Long-Run Equilibrium Price Level

  As for factors that might have accounted for fiscal and monetary policy, it is usually a softening economy that leads to expansionary policies. Long-Run Equilibrium Price Level is considered.

• Aggregate Demand, Multiplier Effect, and Fiscal Policy

  Contractionary vs expansionary fiscal policy; shifting of the AD curve; Keynes and the multiplier

• Old econ practice exam

  Then our exports will shrink, resulting in a decrease in AD, AD curve moves backwards to the left.
  11. A. Fiscal policy means the whole country's policy.
  12. A.

• Concurrent Fiscal and Monetary Policy

  The AD and AS curves relevant to the economy are AD1 and AS1, respectively. The price level in the economy is P1. With the policy of a reduction in the government expenditures, AD shifts to AD2. In the short run AS cannot adjust.

• expansionary fiscal policy

  The IS-LM framework Normally, the expansionary fiscal policy leads rises in interest rates up, while contractionary fiscal policy pulls interest rates down.

• Fiscal and Monetary Expansionary Policy

  You can see this by drawing aggregate demand (AD) - aggregate supply (AS) curves. By the above policy, AD will shift to the right - implication, GDP increases but at the same time price level will also increase.