Explain the actions the federal government would take while engaging in expansionary fiscal policy in terms of the following: * The necessary change in taxes and government spending, * The effect on aggregate demand, GDP, and employment.
Expansionary Economic Policy
Prior to beginning the final assignment, review the following chapters:
Chapter 7: Classical Macroeconomics and the Keynesian Challenge
Chapter 9: Taxes, Government Spending, and Fiscal Policy
Chapter 12: Banking and The Federal Reserve System
Chapter 14: Monetary Policy In Theory And Practice
Focus of the Final Paper
In an effort to move the economy out of a recession, the federal government would engage in expansionary economic policies. Respond to the following points in your paper on the actions the government would take to address expansionary fiscal and monetary policies:
Expansionary Fiscal Policy:
Explain the actions the federal government would take while engaging in expansionary fiscal policy in terms of the following:
* The necessary change in taxes and government spending,
* The effect on aggregate demand, GDP, and employment.
Expansionary Monetary Policy:
The three tools the Federal Reserve Bank (The Fed) uses when conducting monetary policy are the required reserve ratio, the discount rate, and open market operations.
Explain the actions of the Fed in regard to the three tools.
* When the required reserve ratio is increased or decreased
* When the discount rate is increased or decreased
* Buying or selling government securities when conducting expansionary monetary policy
Explain how these actions would affect the money supply, interest rates, spending, aggregate demand, GDP, and employment.
Writing the Final Paper
The Final Paper:
1. Must be eight to ten double-spaced pages in length and formatted according to APA style as outlined in your approved styled guide.
2. Must include a title page that includes:
* Title of paper
* Student’s name
* Course name and number
* Instructor’s name
* Date submitted
3. Must include an introductory paragraph with a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must conclude with a restatement of the thesis and a conclusion paragraph.
6. Must use at least four scholarly resources, including the textbook. Two sources must come from the Ashford Library.
7. Must use APA style as outlined in your approved style guide to document all sources.
8. Must include, on the final page, a reference List that is completed according to APA style as outlined in your approved style guide