How does expansionary fiscal policy affect aggregate demand

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Define fiscal policy and explain how it works.

Under what conditions would the government choose to implement expansionary fiscal policy? How does expansionary fiscal policy affect Aggregate Demand?

Use an example from U.S. history to illustrate how expansionary fiscal policy affects the economy (output, employment, prices).

What are some potential shortcomings of using fiscal policy as a way to manage the economy?

Reference no: EM13840014

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