ECONOMICS 204 Discussion

Monetary and Fiscal Policy Applications
The Discussion topics focus on the effects of monetary and fiscal
policy instruments on the aggregate demand in the economy, and the short-run
trade-off between the rate of inflation and rate of unemployment. The specific
areas of discussions include how monetary and fiscal policy instruments are
used to change AD, the differences between monetary and fiscal policy and their
respective instruments, and policy measures to deal with the short-run
trade-off between rates of inflation and unemployment in the economy.
Read Chapters 21 and 22, and remember to include references and
links to the websites that are important contributors to your posts (comments).
Respond to two of the following Discussion topics.
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?

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