Effect of Economic Stimulus Under 2 Macroeconomic Theories 1 The federal government has recently enacted several large spending bills (ie economic stimulus) Use the Modern Keynesian aggregate supply...

Effect of Economic Stimulus Under 2 Macroeconomic Theories

1 The federal government has recently enacted several large

spending bills (ie economic stimulus) Use the Modern Keynesian aggregate

supply and demand system to tell which curve(s) shift and in which direction

Explain how the price level will be affected by these expenditures in the

short-run Explain how GDP is affected in the long-run

2 Conduct the same exercise as in #1 using the Classical

model Explain how the price level will be affected by these expenditures in

the short-run Explain how GDP is affected in the long-run

3 Compare your results from #1 and #2 Are the results

different? Explain