Not use ai please Assume that an economy has an inflationary gap. Compare the use of fiscal policy with the use of monetary policy toremove the gap. Assume a closed economy. Use graphs to illustrate.

Step 1: What's an Inflationary Gap?An inflationary gap happens when actual GDP is higher than…

Answered: Assume that an economy has an…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 58CTQ: Are Says law and Keynes law necessarily mutually exclusive?

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Similar questions

Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and longâ€”term impacts of such policies on the economy?
Who in an economy is the big winner from inflation?
Does Says law apply more accurately in the long run or the short run? What about Keynes law?
What is Keynes; law?
Economist Arthur Laffer famously pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Why might this be the case?
What impact would a decrease in the size of the labor force have on GDP and the puce level according to the AD/AS model?
Without looking at Table 19.7, return to Figure 19.10. If we define a recession as a significant decline in national output, can you identify any post-1960 recessions in addition to the 20082009 recession? (This requires a judgment call.)
Why are inflationary dangers lower in the high-income economies than in low-income and middle-income economies?
Imagine that the government statisticians who calculate the inflation rate have been updating the basic basket of goods once every 10 years, but now they decide to update it every five years. How will this Change affect the amount of substitution bias and quality/new goods bias?

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Assume that an economy has an inflationary gap. Compare the use of fiscal policy with the use of monetary policy to remove the gap. Assume a closed economy. Use graphs to illustrate.