econ
...cession is formed. Our main goal to get us out of recession is to increase the Aggregate Demand in our economy. Along with increasing Aggregate Demand, we also need to increase our current money supply. We are aware of this because in a recession both your aggregate demand and money supply start off low. Our fiscal policy direction is one of expansionary. We are picking expansionary because it causes aggregate demand to increase. Aggregate demand increases due to the increase in GDP and CPI which is caused by expansionary fiscal policy. There are several tools that need to be used in order for this to occur. First off, we can lower income tax. This will cause a rise in consumer spending, increases c+i+g+x-m, increases consumer income and cpi; which in turn increases aggregate demand which causes full employment. Second, we can lower interest rates which increases investment spending. Increasing investment spending causes in increase in aggregate demand which causes full employment. Thirdly, we could increase government spending. This causes a rise in c+i+g+x-m, which causes aggregate demand to rise...