Macroeconomics Discussion board question In Tutorial Library

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TITLE: Macroeconomics Discussion board question

CLASS / COURSE: Macroeconomics


As we are all well aware, the state of the economy remains a concern given the sharp declines in GDP of the recent past. Congress and the President passed an economic stimulus package (Expansionary Fiscal Policy) early in 2008, as well as a rescue package for ailing banks (TARP) at the end of 2008. In early 2009, we passed a much larger economic stimulus as well. The Federal Reserve has also been cutting interest rates repeatedly (Expansionary Monetary Policy). Explain what was happening to the economy in terms of the AS/AS model, including what would need to happen to bring us out of the "recessionary gap". In other words, using the AS/AD model as a starting point, explain the economic situation of today. What are your personal beliefs regarding more activist Keynesian approaches to stimulate AD, versus a laissez-faire approach to let SR AS adjust our economy? If you are having difficulty getting started, think of what makes up AD...remember, AD=C + I + G + NX.  Also, SR AS is dependent on the cost of inputs to production...wages, resources, technology.

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