Consider the U.S. aggregate economy, which is currently operating below its potential. Although the unemployment rate has been slowly declining, it is still well above the target rate of about 5%; the labor fprce participation rate of 63.6% is continuing to decline; and industrial capacity utilization is 77.8%, which is 2.5% below its long-run average.

(A) In this context, describe how an increase in goverment expenditures on goods and services would stimulate the aggregate economy?

(B) Also in this context, describe how a decrease in personal income taxes would stimulate the aggregate economy?