Connections: Countercyclical Fiscal Policies: Domestic US Market

Always conducted by

Fighting Inflation:

Policy Name =

Taxes =

Gov. Spending =

Budget Result =

Aggregate Model:

C should =

G should =

AD should =

Money Market:

DM will=

i should=

(Ig on Aggregate Model will)=

Loanable Funds…Market:

The budget issue will cause:

S LF =

DLF =

Please see answer below

Explanation: Countercyclical Fiscal Policies

Domestic US Market

Always conducted by Congress

Fighting Inflation:  

Policy Name =  Contractionary

Taxes =  Raise

Gov. Spending =  Decrease

Budget Result =  Surplus

Aggregate Model:

C should =  decrease

G should =decrease

AD should =decrease

Money Market:

DM will=  decrease

i should=  decrease

(Ig on Aggregate Model will)=

increase

Loanable Funds…Market:

The budget issue will cause:

S LF =increase

DLF =decrease

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