MODULE 20: Economic Policy and the Aggregate Demand

Chapter Introduction

Module 20

Economic Policy and the Aggregate Demand–Aggregate Supply Model

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20Economic Policy and the Aggregate Demand–Aggregate Supply Model

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In this Module, you will learn to:

Discuss how the AD–AS model is used to formulate macroeconomic policy
Explain the rationale for stabilization policy Macroeconomic Policy
Describe the importance of fiscal policy as a tool for managing economic fluctuations
Identify the policies that constitute expansionary fiscal policy and those that constitute contractionary fiscal policy