Macroeconomic: Expansionary Policy

Given the recent government interaction in our economy. Do you believe that without the government’s expansionary policy, our economy would not have fixed itself.

• Discuss whether or not you agree with the government’s decision for expansionary policy. Ie. the pros and cons of their decision, in terms of fixing our economy, keeping in mind there’s Fiscal and Monetary Policy going on at the same time.

• Do you feel that the government is “crowding out” private investment and consumption with their expansionary spending policies?
  • Find an example of the current spending/proposals by the gov’t and discuss whether this is complete or partial crowding out. With regards to your example, do you feel that either firms or consumers would have spent on their own – had it not be for gov’t?

  
  

Comment:
You went through and covered everything. But, just to note the gov’t didn’t do everything – like reducing the reserve requirement. Also, would people who use medicaid have purchased insurance otherwise? You have a good point about raising taxes to fund the program, but then that would be true about all programs. So, I don’t think this is really crowding out.