Aggregate Demand and Supply and Fiscal Policy
- Image that the mayor has hired you as a consultant to evaluate the increase in aggregate demand in the city where you live. Describe to the mayor one (1) aggregate demand and supply factor that would have the greatest impact on the economy of your city.
- Determine what fiscal policy measure has a more direct impact to the economy, an increase in government spending or an equal decrease in taxes if consumer confidence is lower than the previous month. Explain your reasoning.
On factor that can affect the aggregate demand and supply of a city is the rise and fall of currencies. Take for instance, the US dollar falls relative to other currencies such as the Pound and Euro. The net effect is that goods produced…