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l explanations for the solutions that the Government applies are Keynesian Economics. One of the theories associated with Keynesian economics is the expansionary fiscal policy which explains what happens when government spending increases. The following formula further explains this theory; (G á ðADá [C+I +Gá+NX] (TâðADá [Cá+ Iá+G+NX]) taxes reduced increase aggregate demand. The 2008 stimulus plan was much less complex than the ARRA. Comparing total cost and distributions, the 2008 bill only cost 150 billion dollars. The 2008 stimulus plan didn’t have a huge effect on the economy as it only increased consumption by 3% due to a prolonged process in the distribution of stimulus checks. The American Recovery and Reinvestment act of 2009 specifies that 37% of the package is to be devoted to tax cuts that are equivalent to approximately 288 billion dollars. 18% of the package or 144 billion dollars is being given for state and local fiscal relief. 45% of the package or 357 billion dollars is being given to social and spending programs on a federal level.

In comparison to the 2008 stimulus plan, this plan serves a much broader sector of the economy as billions of tax dollars are being presented to local state fiscal relief, health care, education, infrastructure, developments in science and a few of other areas. The American Recovery and Reinvestment act of 2009 is still in progress until 2010, so the effects are still unpredictable as to how the economy will be affected until the process is complete. It’s probably safe to say that tax reduction is the most important portion in the stimulus plans process as it will increase the overall aggregate demand and spending amongst the U.S. citizens.

In addition, considering the fact that our country has plummeted into recession, this package is said to help the economy recover from its detrimental state. According to hubpages.com the main focus of the ARRA is to increase consumer consumption, investment and spending in the market. This package also co-exists with Fiscal policies, Budget deficits and Debt. The president is considering using two fiscal tools to help improve the economy which include government spending, and taxes illustrated in chapter 8 of the Macroeconomics brief edition book. The government accumulated an 819 billion dollar budget in order to spend on the entire stimulus package. This is a prime example of Discretionary fiscal policy. This policy explains the significant changes in government spending and collection of taxes, which also explains the current billon dollar budget being proposed by the government. These processes are a few ways to help our economy move toward expansion. With government spending increasing this causes a reduction in taxes. When taxes are decreased, it leaves consumers more money to spend on goods and services, causing an increase in the overall aggregate demand. In increase in the overall demand of goods and services helps regenerate the economy in an effort to push it out of the recession. In addition, an overall increase in consumer spending will allow the government to pull government spending from certain areas as consumers become more optimistic about the economy. Something the American Recovery and Reinvestment Act of 2009 definitely wants to avoid is the Crowding Out Effect. When there is fiscal expansion through an increase i本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。