Sunday, February 17, 2008

What the stimulus package means for you

I wanted my students to have some idea of how the economic stimulus plan might work and effect them. President Bush has signed the bill. So people will be getting rebate checks in a few months. How much you might get depends on your income, marital status and number of children. To read all about it go to What the stimulus package means for you. As I have explained in class, the hope is that people will spend this money, causing an increase in aggregate demand in the flat or relatively flat part of short run aggregate supply. This will increase Q or GDP in the economy, which will cause firms to hire more workers without causing might inflation (inflation could always occurr if SRAS shifted left if, for example, oil prices shoot up again). Also, lower interest rates will encourage people to borrow and spend, shifting AD to the right.

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