How does a fiscal policy diagram work? (1 Viewer)

[tkddavo]

please explain

 

[michael1990]

Theres a fiscal policy diagram?

 

[veloc1ty]

Perhaps he's talking about increasing/decreasing G on an income-exp diagram?

 

[tkddavo]

yes but the graph has three horizontal lines and to diagonal lines with something called national income

 

[donetha]

Maybe an AD/AS diagram...and then a movement of AD to AD1 indicating an increase/decrase in C

Just brainstorming here

 

[lolcal]

i think he means this:

i'll explain it tomorrow, i'm going to bed now. but anyone else, feel free

 

[michael1990]

i think he means this:

i'll explain it tomorrow, i'm going to bed now. but anyone else, feel free

Still didn't explain the diagram.

 

[lolcal]

During a boom, policies can be implemented to reduce AD and thus lower output, the rate of economic growth and problems associated with this growth (inflation). So from AD' to AD.

Then during a recession policies can be implemented to increase AD and thus increase output, the rate economic growth and employment. It would move it from AD" to AD.

It's like the rationale of the policy, it is used to shift AD so as to close the inflationary/deflationary gaps.

 

[Eddy92]

i think he means this:

i'll explain it tomorrow, i'm going to bed now. but anyone else, feel free

omg complicated...i am gona fail help me man !1