Question

Anyone please help me how to draw AS AD diagram to illustrate the impact of the adjustment in it fiscal policy

Thank you

MACROECONOMICS 1 (ECON 1192) Policy Report In class discussion in week 12 Written report submission deadline: January 15 2019 (Tuesday week 13)-1000 words 4 countries: Venezuela, South Africa, Turkey, Spain Version 2 -Fiscal Policy For the specific country that you have chosen, please write a report on its fiscal policy. Your report should contain the following information. Produce a macroeconomic snapshot (growth rate, inflation rate, unemployment rate, population, geographical/demographical characteristics....) . Analysis of fiscal policy: the government agency in charge of this (.e.g Ministry of Finance/Department of Treasury), its recent tax and government spending changes, the budget situation (surplus/deficit), the importance of general government expenditure in GDP. . Assess impacts of such policies if any (based on diagram). Draw AS AD diagram to illustrate the impacts of the adjustment in its fiscal policy. Compare the same policy between different countries, highlighting the key characteristic of your chosen country, incorporate the findings from in class discussion into the final work Note: In the last report, you are expected to search for data on yourselves. Recommended sources are World Bank, IMF, OECD dato, or the national statistics agencies of countries. Make sure you properly cite data sources in your report. Specifically in the final essay, you will: .Produce a macroeconomic snapshot (growth rate, inflation rate, unemployment rate, population, geographical/demographical characteristics....). Analyse one out of three policies: fiscal policy, monetary policy, open macroeconomics. Fiscal policy: short run and long run, tax and government spending changes Assess impacts of such policies if any Compare the same policy between different countries, hightling the key characteristic of their chosen country, incorporate the findings from in class discussion into the final work

Answer 1

As you specifically asked me to  draw AS AD diagram to illustrate the impact of the adjustment in it fiscal policy.

so, fiscal policy involves changes in government taxes and expenditure polices.therefore, it directly affect AD.we can divide fiscal policy into two:

Expansionary Fiscal Policy:

As shown in above diagram, due to Expansionary Fiscal Policy adopted by the government AD curve shifts to the right,from AD₀  TO AD₁ .As a result output increases from Y` to Y``.

Expansionary Fiscal Policy involves increase in government expenditure and decrease in taxes.

Contractionary fiscal policy:

As shown in above diagram, due to Contractionary Fiscal Policy adopted by the government AD curve shifts to the left, from AD₀  TO AD₁ .As a result output decreases from Y` to Y``.

Contractionary fiscal policy involves decrease in government expenditure and increases in taxes.

I hope this clarifies your query.