ECO 372 Principles of Macroeconomics Week 3 Team Assignment

Fiscal Policy and Aggregate Demand

Analyze fiscal policy to address each of the following points:

• Define fiscal policy and explain how it works.
• Under what conditions would the government choose to implement expansionary fiscal policy?  How does expansionary fiscal policy affect Aggregate Demand?
• Use an example from U.S. history to illustrate how expansionary fiscal policy affects the economy (output, employment, prices).
• What are some potential shortcomings of using fiscal policy as a way to manage the economy?

Write a 750- to 900-word paper covering these topics..