Howard College The Aggregate Demand and Aggregate Supply Model Paper
As a financial analyst of a local brokerage company, you are asked to explain the purpose of an aggregate demand model and why these models are used to show the effects of monetary policy.
View the following videos: Another Quantitative Easing Video (Links to an external site.), More on Quantitative Easing (and Credit Easing) (Links to an external site.), and Connecting the Keynesian Cross to the IS Curve (Links to an external site.) videos.
The Federal Reserve initiated a second round of quantitative easing in November 2010 and a third-round in September 2012. These rounds of quantitative easing caused economists to debate the role of money in promoting economic growth.
Opponents of quantitative easing emphasized that a nation cannot generate economic growth by printing money. Instead, it must focus on policy that improves productivity. Proponents of additional quantitative easing emphasized that this policy would reduce real interest rates and therefore promote consumer spending and investment. Evaluate both arguments in the context of the aggregate demand and aggregate supply model; provide some examples to support the position you agree with.