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b. Why do businesses and individuals accept paper currency when they know that, unlike gold, the paper the currency is printed on is worth very

b. Why do businesses and individuals accept paper currency when they know that, unlike gold, the paper the currency is printed on is worth very little? The country has fallen into a recession and output has dropped. The government has decided to intervene and is considering the policies outlined below. i) Increase government spending by 5 million dollars or decrease taxes by 5 million dollars. ii) Lower interest rates by 2% a) The first policy decision is an example of what type of policy? b) The second policy decision is an example of what type of policy? c) Discuss why/when the first policy might be preferable as a means of increasing AD and why/when the second policy might be preferable as a means of increasing AD. Be sure to note the advantages and the disadvantages of eachThe country has fallen into a recession and output has dropped. The government has decided to intervene and is considering the policies outlined below. i) Increase government spending by 5 million dollars or decrease taxes by 5 million dollars. ii) Lower interest rates by 2% a) The first policy decision is an example of what type of policy? b) The second policy decision is

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