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Some Economists Argue That Policymakers Can Use Monetary and Fiscal

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Essay

Some economists argue that policymakers can use monetary and fiscal policy to reduce the severity of economic fluctuations. What are some things policymakers can do to boost the economy when aggregate demand is inadequate to ensure full employment?


Definitions:

Cognitive Interpretations

The mental processes of comprehending, interpreting, and ascribing meaning to the surrounding environment and experiences.

Physiological Responses

The body's automatic reactions to a stimulus, including changes in heart rate, breathing rate, and other bodily functions.

Expressive Reactions

Emotional responses to stimuli or events that are outwardly displayed and observable by others.

Schachter's Two-Factor Theory

A psychological theory proposing that emotion is experienced through a combination of physiological arousal and a cognitive label applied to explain the arousal.

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