Budgetary Policy & the Goals: Effects, Strengths & Weaknesses

What this note covers

1. How budget initiatives transmit to aggregate demand
2. Stance: expansionary, contractionary or neutral — and how to read it
3. Effects on the three domestic macroeconomic goals
4. Worked application: a $12 billion stimulus package in a slowing economy
5. Strengths of budgetary policy
6. Weaknesses: time lags, political constraints and other limits
7. Exam strategy for budgetary policy questions

7 sections · 14 key terms & formulas · 6 common mistakes