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should be 75-150 words in length, and is due on Sunday. By Tuesday, you
should respond to two additional posts from your peers. When the economy is in a
recessionary mode, aggregate demand shifting inward is often the
culprit. Deflationary pressures on prices ensue, and output falls,
causing problems like higher unemployment and contraction of the
economy. When
the economy is in a recessionary mode, what will likely be the actions
by government using fiscal policy? Is it better to concentrate on
aggregate demand or aggregate supply? Why? Review
how and why aggregate demand and aggregate supply shift inward and
outward. English economist John Maynard Keynes developed a model that
provides an explanation for the high and prolonged rate of unemployment
of the Great Depression. According to Keynes, what are the major
sources of economic instability? Fiscal policy is spending and taxation
of the executive branch of the federal government; in recessionary
times, what initiatives in spending and/or taxation are going to help
the economy?