Macroeconomics, Public finance, Fiscal policy

The chapter reveals some of the expansionary fiscal and monetary policies which impacts on the aggregate demand of the economy. The effectiveness of the two policies is derived from the way the combination of both policies affects the aggregate demand in the economy (APE). The monetary policies affects the supply function (ASF), thereby shifting the supply curve towards the right or left. This causes the rate of interest to fall or rise respectively. On the other hand the fiscal policies alter the aggregate demand in the economy through the increase or decrease of government purchase components and the after tax share of the GDY which is held by the private sector. The following diagrams would portray a graphical analysis of some of the policy measures that are undertaken and their