A big increase in government spending is an example of a positive demand shock.
A demand shock is a sudden event that increases or decreases demand for goods or services temporarily. A positive demand shock increases aggregate demand and a negative demand shock decreases aggregate demand. Therefore there will be an initial inflation with the shock but since demand shocks are temporary and the central bank commits to an inflation rate target, then over time inflation will fall back down to the inflation target.
Expansionary fiscal policy is an increase in government spending or a decrease in taxation, while contractionary fiscal policy is a decrease in government spending or an increase in taxes. Expansionary fiscal policy can be used by governments to stimulate the economy during a recession.
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Then the Speaker of the House takes the presidency, and the President pro temp ore of the Senate becomes Vice President.
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The persistence of the two-party system have contributed to long-established party loyalties is the diagram that best explains a cause and effect relationship that has shaped U.S. Politics.
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- Though there have been multiple parties at different times in the history of politics of the United States, the only dominant ones are the two that we know by the names of the Democratic Party and the Republican Party.
- The healthy two-party politics practiced in the United States has shaped the governance of the nation so by developing itself into a strong system of checks and balances.
