Name: Gabriel Villarreal Name: Pablo Arevalo

I. Critical thinking: Making connections to the real world.

Note: Monetary Policy is handled by Banxico. Banxico uses interest rates and reserve
requirements to achieve economic goals.

Fiscal Policy is handled by Secretaria de Hacienda y Credito Publico. They use taxes and
government spending to achieve economic goals.

Headline 1 ( 25 points)

March, 2023
** Indicate if this strategy is part of the monetary or fiscal policy. Monetary
**Which economic model illustrates the economic consequences of this decision?
Graph B

**Is it an expansionary or a contraction policy? Contraction

What will be the effects on the aggregate demand, income, consumption, GDP and economic
growth? Less: GDP, consumption, income, AD, economic growth.
Headline 2 ( 25 points)

Indicate if this strategy is part of the monetary or fiscal policy. Monetary

Which economic model illustrates the economic consequences of increasing reserve
requirements? Graph B

Is it an expansionary or a contraction policy? Contraction

What will be the effects on the aggregate demand, income, consumption, GDP and economic
growth ? All less.

Headline 3 ( 25 points)

March 2020 ( AMLO announces an increase in government spending)

Indicate if this strategy is part of the monetary or fiscal policy?Fisical
Which economic model illustrates the economic consequences of this decision? Graph A
Is it an expansionary or a contraction policy? Expansionary
What will be the effects on the aggregate demand, income, consumption, GDP and economic
growth?
All increase

Headline 4 ( 25 points)

Indicate if this strategy is part of the monetary or fiscal policy. Fiscal

Which economic model illustrates the economic consequences of reducing taxes?
Is it an expansionary or a contraction policy? Expansion , graph A
What will be the effects on the aggregate demand, income, consumption, GDP and economic
growth? All of the economic indicators will increase