The Influence of Monetary and Fiscal Policy on Aggregate Demand Many factors influence aggregate demand besides monetary and fiscal policy. In particular, desired spending by households and business firms determines the overall demand for goods and services. The Influence of Monetary and Fiscal Policy on Aggregate Demand When desired spending changes, aggregate demand shifts, causing short-run fluctuations in output and employment. Monetary and fiscal policy are sometimes used to offset those shifts and stabilize the economy. HOW MONETARY POLICY INFLUENCES AGGREGATE DEMAND The aggregate dem
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