Aggregate Demand, Multiplier Effect, and Fiscal Policy
1. Describe the factors that cause the aggregate demand (AD) curve to shift and the factors that cause the short run aggregate supply (SAS) curve to shift. Explain how each factor described above works in shifting the AD and SAS curves.
2. Explain the difference between expansionary and contractionary fiscal policy and describe how each policy affects aggregate demand, aggregate expenditures, output and income.
3. Explain how the multiplier effect would support Keynes' explanation how economies can fall into recession or depressions.