Question

Review the “EYE on Your Life” caption titled, Your Views on Fiscal Policy and How Fiscal Policy Affects You, on page 421 in the textbook. As previously covered in Chapter 13, we learned that the real business cycle results from fluctuations in the pace of growth of labor productivity and potential GDP. Thus, utilizing the knowledge that you have accumulated during our course, and by reading or watching the current news, determine the macroeconomic policy issues that face our economy today. Specifically, discuss whether we’re facing business cycle problems, and whether our fiscal policies are influencing aggregate supply, aggregate demand, or both; and the impacts these policies may have on potential GDP.

Answer 1