(H2E_Macro) Macroeconomic Policies

Question 1

expansionary demand-side policy

Answer 1

increase AD (including the initial autonomous increase in AD from an increase in G) and subsequent increases in induced C = inc in total expenditure

Question 1

demand side policies

Answer 1

policies where the government attempts to influence AD by altering the individual components of AD (C, I, G (X-M)) through either expansionary or contractionary Dd side policies

Question 2

what is the result of an increase in total expenditure from an expansionary Dd side policy?

Answer 2

firms employ more FOP to meet increased demand = increasing RNI via multiplier effect