Answered: State whether the following statements…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

State whether the following statements are true or false, justify your response in either case:
1. Government has applied tax cut twice in last year to stimulate the output growth of economy which is still not achieved. The mentioned situation exemplifies the “Inside lag.”
2. Fiscal policy can affect the rental cost of capital.
3. The concept of sacrifice ratio suggests that reducing inflation is a costless exercise.
4. The short run trade off between inflation and unemployment depends upon whether people form their expectations rationally or adaptively.
5. Concept of Hysteresis suggests that the economic shocks affect the economy only for a short time period.

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

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