In 2000 the chinese government mandated three one-week holidays throughout the year to stimulate consumer spending. the idea was that these extended vacations would induce the chinese to spend more of their earnings while on vacation.
a. using the ad-as framework, show the mechanism through which the chinese government believed that the mandated holidays would stimulate the economy.
b. although consumption spending rose during the vacation period, the data show that consumption fell before and after the vacation. did the policy work?

Crowding out is a phenomenon focused upon most by the macroeconomists of whereby a government deficit interest rates, which in turn private investment spending. this group also believed that fiscal policy is the only thing that can lower natural unemployment. is just as effective in countering recessions as monetary policy. can be used most of the time, but monetary policy becomes a better option when velocity is fluctuating. should be used only if the central bank follows a monetary policy rule. faces problematic lags in propagating changes throughout the economy.