Describe Discretionary and Nondiscretionary Policy in the Case of a Negative

question 88

Essay

Describe discretionary and nondiscretionary policy in the case of a negative aggregate supply shock to the economy. Use a graph to support your answer.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus how much they actually receive.

Blue Jeans

Denim trousers that are typically dyed with indigo and have become a significant fashion item and symbol of Western culture.

Tax

Mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund public expenditures.

Competitive Market

A market in which there are many buyers and sellers of the same good or service, none of whom can influence the price at which the good or service is sold.