In questions that ask you to refer to Figure 1, you do not need to copy it out, but may include a re-drawn version if this helps to explain vour answer

Question 1

In the aftermath of a recessionary shock, how might policymakers use fiscal policy to aid recovery? Use the aggregate demand model in your answer.

 

Transcribed Image Text:

Interest rate (%) Inflation (%) VPC Figure 1 The inflation-targeting model IS Output PC=T MR Output Interest rate (%) Inflation (%) VPC Figure 1 The inflation-targeting model IS Output PC=T MR Output