Country Z is suffering from the effects of a negative supply shock. If the government’s main...
Country Z is suffering from the effects of a negative supply shock. If the government’s main goal is to return output to potential, then it will ________. If the government’s main goal is to maintain low and stable inflation, then it will ________.
| take no action; take no action |
| pursue contractionary fiscal policy; take no action |
| pursue contractionary fiscal policy; pursue expansionary fiscal policy |
| pursue expansionary fiscal policy; pursue expansionary fiscal policy |
| pursue expansionary fiscal policy; take no action |
Homework Answers
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Country Z is suffering from the effects of a negative supply
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1.The figure below depicts the macroeconomic situation of stagflation[1] inflicted by the negative supply shock. As...
1.The figure below
depicts the macroeconomic situation of
stagflation[1] inflicted by the negative
supply shock.
As the economic advisor to PM Scott Morrison (!), you are
contemplating the most appropriate policy response from the two
choices (note that we do not consider the monetary policy here) in
a given scenario below;
Expansionary fiscal policy
Contractionary fiscal policy
For this question, there is no need to demonstrate the
answer showing in the figure (but useful to have it in your
mind)!...
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1.The figure below
depicts the macroeconomic situation of
stagflation[1] inflicted by the negative
supply shock.
As the economic advisor to PM Scott Morrison (!), you are
contemplating the most appropriate policy response from the two
choices (note that we do not consider the monetary policy here) in
a given scenario below;
Expansionary fiscal policy
Contractionary fiscal policy
For this question, there is no need to demonstrate the
answer showing in the figure (but useful to have it in your
mind)!...
1. Is the Phillips curve a myth? Intertemporal tradeoff between inflation and unemployment After the World War II, empirical economists noticed that, in many advanced economies, as unemployment fell, inflation tended to rise, and vice versa. The inverse relationship between unemployment and Inflation, was depicted as the Phillips curve, after William Phillips of the London School of Economics. In the 1950s and 1960s, the Phillips curve convinced many policy makers that they could use the relationship to pick acceptable levels...
6) Financial crises in advanced economies might start from a A) debt deflation. B) currency crisis. C) mismanagement of financial innovations. D) currency mismatch. 7) The most common definition that monetary policymakers use for price stability is A) low and stable deflation. B) an inflation rate of zero percent. C) high and stable inflation. D) low and stable inflation. 8) Monetary policy is considered time-inconsistent because A) of the lag times associated with the implementation of monetary policy and its...
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