recession -- 1. government purchases2. transfer payment3. cut taxesself correctionrecession - wage- AS- shifts AS to rightkeep the wage highminimum wage, efficiency wage, labor unionsupply sider1. cut income taxes. labor- AS shifts to right2. cut tax on savings income 3. cut tax on capital gains taxsave- investment- physical capital- AS shifts to right4. cut corporate taxresearch fee- AS shifts to rightautonomic stabilizers1.tax. 2.unemployment insurance. 3.welfare. 4.social securitycost push inflation - ADdemand pull inflation - ASRegansame price level, produce more1.cut tax(4) - shift AS2.autonomous spending- ADproblem - debtmoneydivisible, protable, durable, stable(difficult to copy)commodity money - have own intrinsic value
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