You are the President of the United States and the economy is going
into a recession. What fiscal...

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You are the President of the United States and the economy is going
 into a recession. What fiscal policy would you implement and why? 
Graph and explain the whole situation from start to finish, make up 
your own numbers. Make up your own MPC from that you will be able to 
derive the multiplier.

David · Accepted Answer

You are the President of the United States and the economy is going into a recession. What fiscal policy would you implement and why? Graph and explain the whole situation from start to finish, make up your own numbers. Make up your own MPC from that you will be able to derive the multiplier.
Let us start from a full employment level of GDP.(E1) This is also called the potential level of GDP. At this level we depict the economy using the AD AS approach. AS curve is vertical at full employment level.  This is called the long run supply curve. In the short run AS slopes upwards as shown by AS1. The AD slopes downwards.

You are the President of the United States and the economy is going into a recession. What fiscal policy would you implement and why? Graph and explain the whole situation from start to finish, make...

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