Fiscal and Monetary Policies
Introduction: Expansionary and Contractionary Policies
The macroeconomic policymakers are the president, Congress, and the Federal Reserve. Macroeconomic policies are also referred to as stabilization policies. The government adopts macroeconomic policies to improve and stabilize economic performance. Stabilization policies focus on macroeconomic goals such as high real GDP growth, low unemployment, and low stable inflation. To attain these objectives, macroeconomic policies may be expansionary or contractionary.
Expansionary policies are used to alleviate a macroeconomic slowdown, in other words a recessionary gap. Keynesianism is the active use of an expansionary policy to cure a weak economy. According ...
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