Question

1. During the planning stages of the stimulus plan of 2009 (to combat the very serious downturn in the economy of that year), one often heard politicians and pundits speaking of "shovel ready" projects. What do you suppose they meant by this and why do you suppose this was important? 2. Why might something like the Supplemental Nutrition Assistance Program (a.k.a. "food stamps")| be considered an automatic stabilizer? You must start a thread before you can read and reply to other threads

Answer 1

Ans 1.

This phrase was used by Obama.Shovel Ready can be described as large scale construction projects , where with panning and sufficient funding , a construction project can start within a short period of time. It was made because it will have a better and a immediate impact on the economy than spending in some long term projects. So if the given stimulus is money, then by this more employment generated quickly and more people will be able to spend money. So, that's why at the time of recession ,shovel ready project's made a positive impact on the economy.

Ans 2.

Food Stamps worked as a automatic stabilizer because when recession happened many people became unemployed and that made more people and household be eligible for food stamps , where this additional spending resulted the Aggregate Demand to grow (positive impact) and also this gave rise to the economic activity. Thereby it helped minimize the harm which happened due to recession.