This exercise points to a clear policy dilemma. A fiscal contraction may have desirable long-run effect on output and living standards, but the short-run effects are output and gap.
This exercise points to a clear policy dilemma. A fiscal contraction may have desirable long-run effect on output and living standards, but the short-run effects are output and gap.
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter16: Expectations Theory And The Economy
Section: Chapter Questions
Problem 10QP
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![This exercise points to a clear policy dilemma. A fiscal contraction may have desirable long-run effect
on output and living standards, but the short-run effects are
output and
gap.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F95cf937b-6e89-4855-b6ec-e1ecd1ac66ca%2F944bcc22-764b-4da9-9361-e706c4644d28%2Fj2d44if_processed.jpeg&w=3840&q=75)
Transcribed Image Text:This exercise points to a clear policy dilemma. A fiscal contraction may have desirable long-run effect
on output and living standards, but the short-run effects are
output and
gap.
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