Part 5

Examining Macroeconomic Policy

IN THIS PART …

Consider what monetary and fiscal policies make sense in the long run and recognize the government’s long-run budget constraint.

Examine the role of monetary policy in countering short-run demand shocks.

Analyze the use of fiscal policy to offset short-run demand shocks and learn about the role of automatic fiscal stabilizers.

Discover the Phillips Curve relation between unemployment and inflation and comprehend the link this provides between the short run and the long run.