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As you have learned in Unit 8 (this week), monetary and fiscal policy play important roles in economic stimulation and or stabilization. In this regard:
1. Start with a brief introduction that explains use of Government policy to control the economy.
2. When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy? Look at both.
3. When is it inappropriate to use monetary and fiscal policy to stimulate or stabilize the economy? Look at both.
4. What specific fiscal policy tools would you use to stimulate aggregate demand and how?
5. What specific monetary policy tools would you use to stimulate aggregate demand and how?
6. What is your conclusion, should policymakers use the monetary and or fiscal policy, or a combination of both, to stimulate aggregate demand? Explain your reasoning.
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