1) What is fiscal policy? If there were a recession, how could fiscal policy be utilized in an attempt to recreate full employment? What would be appropriate fiscal policy if there were inflation?
2) Be able to do a problem of the following sort: According to the Keynesian model, if aggregate demand is $60 billion less than what would be adequate for full employment, and if the MPC = .75, then how much would the government have to spend to set the economy on its way to full employment?