Purchase Solution

Economic recession & political action

Not what you're looking for?

Ask Custom Question

Assume that the economy is already in a recession, and both the President and Congress have decided to do something to restore the economy. Both agree that lowering taxes would not be a good idea, but do believe that it is in the best interest of the economy to increase government spending in defense, education & infrastructure.

The President and Congress change the budget accordingly, but after 18 months, GDP only increased by three quarters of the expected amount. What factors might be responsible for this situation?

Purchase this Solution
Solution Summary

Economic recession & political action are discussed.

Solution Preview

Recall that there are four things that affect GDP via the Aggregate demand function. Those are the four components of the national income accounting identity. Y = C + I + G + NX. And there are things that affect GDP via aggregate supply. Anything that affects costs affects aggregate supply.

If "G" increases then with ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

View More Free Quizzes
Related BrainMass Solutions

  • Organizational Behavior Forces Discussion for Starbucks

    Economic or political conditions including inflation, recession, interest rate fluctuations and actual or anticipated military or political conflicts; ? Longer accounts receivable cycles and financial instability among customers; ?

  • Determining the Effects of Discretionary Fiscal Policies

    Automatic stabilizers are expenditures that have stabilizing economic effects, both lowering economic output in times of economic expansion, and dampening the effects of a recession. These include unemployment insurance and progressive taxation.

  • Definition of a recession

    (Moneymorning, 2009) Causes of Recession can be: 1) Reduction of demand 2) Hyper inflation causes reduction in purchasing power and hence fall in demand. 3) Economic and Political instability References: ttp://www.econlib.org/library/

  • Recent Change in U.S. Business

    Business Could you help me in identifying one recent change in U.S. businesses for economic, social, political, technological, and ecological external environments?

  • U.S. Federal monetary policy

    Depression is any economic downturn where real GDP declines by more than 10 percent. A recession is an economic downturn that is less severe. (economics.

  • Examine the cause of the proposed economic stimulus package

    To summarize, the main factors for the failure of the economic stimulus package outlined here is that it did not address the current problem that caused the recession, the politicians involved are too concerned with keeping their jobs rather than doing

  • Business Cycle

    Economic or political conditions including inflation, recession, interest rate fluctuations and actual or anticipated military or political conflicts; (HP, 2010) http://www.econlib.org/library/Enc/BusinessCycles.html.

  • Lags in the Monetary and Fiscal Policy

    So, in essence the government will be 6 months behind the curve, when it comes to trying to jump-start the economy Action Time Lag: This is the time required between recognizing an economic problem and putting policy into effect.

  • Federal Reserve Bank Policy Conflicts and Limitations of Monetary Policy

    This behavior severely limits the effectiveness of monetary policy during economic recession (5).

View More Related Solutions