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Now that we have a tool to use to
better understand what causes changes in UE, IN, and EG,
let's look at what the government can do to reduce high UE
and high IN. What are the government POLICIES that can
reduce UE and reduce IN?
Luckily, this is one concept where
the terminology used by economists is also used by everybody
else. So when you read about "fiscal policy" and "monetary
policy" in your textbook and in the newspaper, they mean the
same thing!
We will finish this lesson with a
review of the economic history of United States. You have
all heard about the "Great Depression" (1929-1939). Let's
see if we can use what we have learned (the AD/AS model) to
better understand its causes and why it ended.
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