ECONOMICS 1120182 - 119 119 Answer ,contractio

119) What are the key differences between how we illustrate a contractionary fiscal policy in
the basic aggregate demand and aggregate supply model and in the dynamic aggregate
demand and aggregate supply model?
119)
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Learning Outcome: Macro - 9: Discuss fundamental approaches to fiscal policy.
120) Use the dynamic aggregate demand and aggregate supply model and start with Year 1
in a long - run macroeconomic equilibrium. For Year 2, graph aggregate demand,
long - run aggregate supply, and short - run aggregate supply such that the condition of
the economy will induce the president and Congress to conduct contractionary fiscal
policy. Briefly explain the condition of the economy and what the president and
Congress are attempting to do.
120)