Using what you have learned in this unit, choose an expansionary FISCAL policy that you would recommend to help an economy that is in a recession. This should be a specific action that government could take to increase GDP. You should not choose a monetary policy (i.e. interest rate manipulation, selling of bonds, or printing of money).

Explain how your policy would help increase aggregate demand. That is, does it increase C, I, G, or X?

Explain what would happen to prices (i.e. inflation).

You may use either the Modern Keynesian model or the Classical Model to conduct your analysis. Just be sure to note which one you are using.

For your responses to classmates, help them identify other effects of their policy OR explain how they might have arrived at a different conclusion if they had chosen the other model.

Please have 300 word count.

Please use the reading material only for reference and intext citation.

Please DON’T use any outside references.

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