Directions:Read the following excerpts. Identify whether the policy action is fiscal or monetary and expansionary or contractionary. Draw and label the change that would occur on the ADAS graph due to the policy action described in each. Identify what will happen as a result of the policy to the price level, employment, and real GDP. (Paper version:Fiscal or Monetary Policy Activity.docxDownload Fiscal or Monetary Policy Activity.docx)

1. Excerpt from Public Law 627 of the 84^thCongress: Signed into law by President Eisenhower on June 29, 1956

"SEC. 102. FEDERAL-AID HIGHWAYS.

(a) (1) AUTHORIZATION OF APPROPRIATIONS.For the purpose of carrying out the provisions of the Federal-Aid Road Act approved July 11, 1916 (39 Stat. 355), and all Acts amendatory thereof and supplementary thereto, there is hereby authorized to be appropriated for the fiscal year ending June 30, 1957, $125,000,000 in addition to any sums heretofore authorized for such fiscal year; the sum of $850,000,000 for the fiscal year ending June 30, 1958; and the sum of $875,000,000 for the fiscal year ending June 30, 1959. The sums herein authorized for each fiscal year shall be available for expenditure as follows:

(A) 45 per centum for projects on the Federal-aid primary highway system.

(B) 30 per centum for projects on the Federal-aid secondary highway system.

(C) 25 per centum for projects on extensions of these systems within urban areas."

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