AB/204 AB204 AB 204 UNIT 9 DISCUSSION 1

AB 204 UNIT 9 DISCUSSION 1

Unit 9: Monetary and Fiscal Policy Applications - Discussion

General Information:

To be an effective learning tool the Discussion Board topics require your active discussion of the topic with at least two of your classmates.

• First post made during, or before, Saturday.
• Posts on at least 3 different days.
• Responses to at least two other classmates.
• Substantive posts that stimulate further active discussion, posts that accurately reflects the learning, that are logical, and clearly presented with correct spelling, word usage, and grammar.
• To be counted as a substantial post, your main post to the Discussion topics should be at least 200 words per Discussion topic.

Monetary and Fiscal Policy Applications

The Discussion topics focus on the effects of monetary and fiscal policy instruments on the aggregate demand in the economy, and the short-run trade-off between the rate of inflation and rate of unemployment. The specific areas of discussions include how monetary and fiscal policy instruments are used to change AD, the differences between monetary and fiscal policy and their respective instruments, and policy measures to deal with the short-run trade-off between rates of inflation and unemployment in the economy.

Read Chapters 21 and 22, and remember to include references and links to the websites that are important contributors to your posts (comments). Respond to two of the following Discussion topics.

Topic 1

Monetary and fiscal policy instruments are used to affect the aggregate demand (AD) in the economy.

a.    What is the difference between contractionary and expansionary monetary policy? What is the difference between contractionary and expansionary fiscal policy? How does each policy affect the AD in the economy?

b.    What are the benefits and major problems of the fiscal policy and monetary policy?