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Fiscal Policy and the Aggregate Supply and Demand Curve

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How does Fiscal Policy Affect the Aggregate Supply and Demand Curve? The result of this is regular shifts to the right of the aggregate supply curves. The original equilibrium occurs at E0, the intersection of aggregate demand curve AD0 and aggregate supply curve...

Effects of Discretionary Policy (Interest Rates)

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How does Discretionary Fiscal Policy affect Interest Rates? Because fiscal policy affects the quantity that the government borrows in financial capital markets, it not only affects aggregate demand—it can also affect interest rates. In the chart below, the original...

Adjustment of Wages and Prices in Macroeconomy

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How quickly do wages and prices adjust in the Macroeconomic environment? How long does it take for wages and prices to adjust, and for the economy to rebound to its potential GDP? This subject is highly contentious. Keynesian economists argue that if the adjustment...

NeoClassical and Keynesian View of Long-Run Aggregate Supply and Demand

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What are the NeoClassical and Keynesian View of Long-Run Aggregate Supply and Demand? The aggregate demand and aggregate supply diagram shows two aggregate supply curves. We draw the original upward sloping aggregate supply curve (SRAS0) is a short-run or Keynesian AS...

Government Spending – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is Government Spending? Government spending covers a range of services that the federal, state, and local governments provide. What is a Budget Deficit and Surplus? When the federal government spends more money than it receives in taxes in a given year, it runs a...
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