Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 15, Problem 2CQ
To determine
Compare the instability during the past sixty years with instability prior to World War II and identify the evidence.
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According to the British economist John Maynard Keynes, economic instability was a product of _______________________.
Why do economists often disagree about the conduct of macroeconomic stabilization policy?
Do you think policy makers should attempt to stabilize the economy ? Why ?
Chapter 15 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- Differentiate between fiscal and monetary policy in brief.arrow_forwardCan governments use expansionary fiscal policy or expansionary monetary to effectively fight recessions? Why or Why Not?arrow_forwardUse the IS/MP framework to explain the impact of stabilization policy to correct for a negative output in the short-run.arrow_forward
- Should Monetary and Fiscal Policymakers Try to Stabilize the Economy? Explain.arrow_forwardWhat is the difference between the Keynesian and rational expectation theories concerning the success of stabilization policy?arrow_forwardIs the Coronavirus Stimulus Package fiscal policy, monetary policy, or both?arrow_forward
- Provide arguments why should policymakers use fiscal and monetary instruments to control aggregate demand and stabilize the economy. If so, when? If not, why not?arrow_forwardIn the context of macroeconomic stabilization policies, which scenario best illustrates the concept of "automatic stabilizers"? a) A government increases spending on infrastructure projects during a recession as part of a deliberate fiscal stimulus package. b) During an economic downturn, unemployment benefits automatically increase as more people become unemployed, providing a buffer to the economy. c) The central bank adjusts the interest rates in response to changes in inflation and unemployment data. d) A government adopts a new policy to increase taxes on high-income earners during periods of economic boom.arrow_forwardPrinciples of good policy design Managing economic challenges and coming up with policy solutions is a tricky task. While striving to optimize overall wellbeing, every policy decision involves some sort of trade-off. An essential element of good policymaking is to consider these trade-offs by weighing up the costs and benefits, across the short-term and long-term, and identifying the ‘winners’ and ‘losers’ of any policy change. As part of your contribution to the Policy Brief, explain what have you learnt about policy trade-offs? Referring to Economic inequity, give an example of a trade-off that policymakers need to consider. In your discussion, you should refer to the economic concept of opportunity cost. (3-5 sentences)arrow_forward
- Only Keynesian economics argues for active macroeconomic policy. True Falsearrow_forwardRead the articles below and answer the following question: Economists are rethinking monetary and fiscal policy. That’s a potentially positive development. and RETHINKING MONETARY POLICY IN A CHANGING WORLD Why is it important to rethink fiscal and monetary policies? Justify your answers using the evidences provided in the article and relevant other resources.arrow_forwardIn theory, fiscal policy can be as effective in stabilizing the economy as is monetary policy. What are the practical reasons that modern nations typically rely on central banks and monetary policy for stabilizing output, employment, and inflation?arrow_forward
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