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Choose three macroeconomic variables to include in discussio

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Reference no: EM13308476

Suppose the U.S. economy is in a recession which came from a negative AD shock.  To provide consumers with an incentive to spend more of their disposable incomes, Congress and the President pass a law making it illegal for an individual to hold more than $500 in cash and checking accounts at any time.  Furthermore, all adults who receive paychecks (assume all paychecks are distributed every two weeks) must spend at least 90% of their paychecks within two weeks of receiving said paychecks.  The penalty for non-compliance is forfeiture of one’s next paycheck (and assume flawless monitoring is done somehow).  Will this law be successful?  

Discuss the implications of this law for the short run and long run. Choose three macroeconomic variables to include in your discussion.

Reference no: EM13308476

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