Monetary and Fiscal Policy Applications - Discussion

Please answer two of the three topics. 200 words per topic.

Topic 1: Monetary and fiscal policy instruments are used to affect the aggregate demand (AD) in the economy. 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?

Topic 2: There are differences in the ways monetary and fiscal policy instruments are formulated and implemented. How does fiscal policy differ from the monetary policy in the U.S. economic system? What are the major problems of the fiscal policy?

Topic 3: Studies indicate that there is a short-run tradeoff between inflation rate and unemployment rate. If you were macroeconomic policy maker, how do you balance the short-run tradeoff between inflation rate and unemployment rate?