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Krugman Macroeconomics Chapter 20

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Subject: 
Economics
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Tags: 
economics
macroeconomics
Public finance
demand
monetary policy
inflation
Inflationary gap
Fiscal policy
business cycle
Aggregate demand
unemployment
Aggregate supply
Aggregate supply
Business
Politics
Social Issues

Module 20: Economic Policy and the Aggregate Demand? Aggregate Supply Model How the AD?AS model is used to formulate macroeconomic policy The rationale for stabilization policy Why fiscal policy is an important tool for managing economic fluctuations Which policies constitute expansionary fiscal policy and which constitute contractionary fiscal policy ? ? Economy is self-correcting in the long run: it will eventually trend back to potential output Stabilization policy: is the use of government policy to reduce the severity of recessions and rein in excessively strong expansions ? Policy in the Face of Demand Shocks Monetary and fiscal policy shift the aggregate demand curve

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