Using what you have learned in this unit, choose an expansionary FISCAL policy that you would recommend to help an economy that is in a recession. This should be a specific action that government could take to increase GDP.You should not choose a monetary policy (i.e. interest rate manipulation, selling of bonds, or printing of money).

Explain how your policy would help increase aggregate demand. That is, does it increase C, I, G, or X?

Explain what would happen to prices (i.e. inflation).Does the policy cause inflation to increase or decrease?

For your responses to classmates, help them identify other effects of their policy.That is, are there other components of GDP that might be affected?