00:01
All right, so how can policymakers respond to a recession? what to do? so, if we have our graph here, right, of like p and y, and aggregate demand looks something like this.
00:19
In a recession, aggregate demand decreases bad.
00:25
So the main goal of policymakers, therefore, is to increase output, right? stimulate economic growth, and they do that by increasing aggregate demand.
00:42
So how can they do that? well, we know that why the gdp function is equal to c plus i plus g plus nx.
00:50
We don't really care about these two right now.
00:54
But what can the government do? you can increase this output by affecting government spending.
00:59
You can totally increase gov spending.
01:06
That will increase aggregate demand...