Class - this week we are going to discuss ways in which Government can influence the business cycle we discussed last week. The macroeconomic principles we will explore were developed by an English Economist back in the 1930s as a method for bringing Europe and the U.S. out of the Great Depression. This week we will be focusing on the C and G in our GDP equation.
First, to which Economist am I referring? What do we call his method for influencing the Economy.
Second, let's take a another look at GDP.
1. If the economy is operating at a point less than full employment (as it is now), what would we want to see happen to GDP?
2. For right now, let's just look at the C (consumption) component of our GDP equation. What would we want to see happen to consumer spending to boost GDP? What could the Government do to increase consumer spending? Hint: Think about disposable income.