Question: In an economy experiencing stagflation, characterized by simultaneous high inflation and high unemployment, which of the following policy combinations would most likely exacerbate the situation? a) Increasing government spending and reducing interest rates b) Decreasing government spending and increasing taxes c) Implementing tight monetary policy and expanding fiscal policy d) Raising interest rates and reducing government spending

Question: In an economy experiencing stagflation, characterized by simultaneous high inflation and high unemployment, which of the following policy combinations would most likely exacerbate the situation? a) Increasing government spending and reducing interest rates b) Decreasing government spending and increasing taxes c) Implementing tight monetary policy and expanding fiscal policy d) Raising interest rates and reducing government spending

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter15: Macroeconomic Viewpoints: New Keynesian, Monetarist, And New Classical

Section: Chapter Questions

Problem 5E

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Problem:Assume that following relationships hold in the Ghanaian economy:C = 100 + 0.7(Y− T)I = 150G = ?T = 200Ye = 3500 a) How much should government spend to attain an equilibrium income level of 3500?b) Suppose that the full employment level of output for this economy is 4000. c) What sort of output gap is Ghana facing?d) Provide a fiscal policy recommendation that could close the gap. Please I want answers to just question E to He) Suppose government spending is still 940 and it wants to reach full employment level, then by how and in what direction should its spending change to close the gap? f) Suppose government wants to use taxes, then what should be the change in taxes to close the gap?g) Suppose government spending and taxes increases by 100, what would be the change in equilibrium income? h) Following from (g) what is the new equilibrium income if the old one was still 3500 for this economy?
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Assume the Pakistan’s economy is in recession: Pakistan implements a combination of expansionary fiscal and monetary policy. In the absence of complete crowding out what will be the effect of these policies on each of the following:(i) Aggregate demand in Pakistan(ii) The price level in Pakistan(iii) Interest rates in Pakistan
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QUESTION ONE The Central bank of any country is a national bank responsible for the implementation of the monetary and fiscal policy of a country in order to avert or reduce inflation. This means that the bank is a vehicle through which the government accomplishes many of its economic objectives and deliver development to its citizens. Inflation can be too toxic to an economy as it diverts the economic intentions of any government. One of the impact of increased inflation is on an increased unemployment levels (Olivia Beria, 2016).i. Using Philips Curve, illustrate how increased inflations affects unemployment levels. ii. . Real money demand refers to the amount of money people want to hold in real terms, which means adjusted for inflation. It represents the desire for individuals to hold a certain amount of purchasing power in liquid form, in order to facilitate transactionsand make purchases. The real money supply is equal to the nominal amount of M2, divided by the fixed aggregate…
Assume the Pakistan’s economy is in recession: Pakistan implements a combination of expansionary fiscal and monetary policy. In the absence of complete crowding out what will be the effect of these policies on each of the following: Aggregate demand in Pakistan The price level in Pakistan Interest rates in Pakistan