Article published: Sep 1, 2014 – out of date: no longer suitable for your IB Economics commentary
IB Economics syllabus: Section 2, Macroeconomics
As deflation is threatening Europe, Mario Draghi, the president of the European Central Bank (ECB) calls for expansionary fiscal policy over contractionary measures, having had a discussion the French president. The problem is that France’s budget deficits have recently been very high, so there is a trade-off here: further increases in the form of a fiscal stimulus would add to the already large deficits – something France does not want. An interesting article, where you can make use of the AD/AS diagram.
Source of photograph: Reuters/Philippe Wojazer