Using the AS-AD framework. Assume there is a negative shock to aggregate demand and the economy is in a recession. Should there be a fiscal and monetary policy response and why? Justify your position. Discuss the short-run and long-run implications of both response and non-response.

Define what is economic growth. In the long run, what policies should be instituted to promote economic growth over time? These should be ideas that transcend recessions and expansions. Explain the mechanisms through which they work and how they would cause growth.

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In response to a negative shock to aggregate demand and a recession both fiscal and monetary policy responses are typically warranted to mitigate the economic downturn and promote recovery Heres why 1 ... View the full answer