Demand-Side Stabilization: Overheating, Hard Landing, and Everything in Between
In the previous chapter we examined the possibility of a shift in the goods market equilibrium from E0 to a higher equilibrium E1, which equated to an equivalent rightward shift in the AD curve. This chapter continues the analysis with a discussion of the specific fiscal and monetary policies by which the aggregate demand (AD) curve can be shifted to enact demand-side stabilization. This will be followed by an in-depth description of overheating, soft landings and hard landings.
KeywordsInterest Rate Unemployment Rate Monetary Policy Government Spending European Central Bank
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