Explain the impact of the expansionary fiscal and monetary policy on equilibrium prices and output.

Expansionary fiscal and monetary policies are two major tools used by governments and central banks to stimulate economic activity, especially during periods of economic downturns or recession. Both policies aim to increase aggregate demand (AD) in the economy, thereby boosting output and reducing unemployment. However, their effects on equilibrium prices and output can vary depending on the context and the way these policies are implemented.

### Expansionary Fiscal Policy

Expansionary fiscal policy involves increasing government spending or decreasing taxes to boost aggregate demand. When the government increases its spending, it directly raises demand for goods and services, leading to higher production and employment. A reduction in taxes puts more disposable income in the hands of consumers, leading to higher consumption. Both these measures aim to shift the aggregate ____ ______ ________ ______ ___ _____ _______.
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