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In an effort to move the economy out of a recession, the federal government would engage in expansionary economic policies. Describe the actions the government would take in conducting expansionary fiscal policy and expansionary monetary policy.
Explain the actions the federal government would take while engaging in expansionary fiscal policy in terms of the following:
•The necessary change in taxes and government spending,
•The effect on aggregate demand, GDP, and employment.
Identify the three tools available to the Federal Reserve Bank (The Fed) when conducting monetary policy. Explain whether the Fed would:
•Increase or decrease the required reserve ratio
•Increase or decrease the discount rate
•Buy or sell government securities when conducting expansionary monetary policy
Explain how these actions would affect the money supply, interest rates, spending, aggregate demand, GDP, and employment
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