Macroeconomics: Private and Public Choice
15th Edition
ISBN: 9781305176799
Author: Gwartney
Publisher: Cengage
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Chapter 15, Problem 7CQ
To determine
Explain the practical problems that limit the use of the discretionary monetary and fiscal policy.
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Considering what you've learned about both fiscal and monetary policy, what are some of the benefits you might see from using monetary policy instead of fiscal policy to address common economic downturns? What could be some of the disadvantages?
How might monetary policy affect the degree of crowding out resulting from fiscal policy?
What is the Liquidity Trap? Discuss the effectiveness of fiscal and monetary policy in this context.
Chapter 15 Solutions
Macroeconomics: Private and Public Choice
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- What is the difference between fiscal and monetary policy? What fiscal and monetary steps can the government and the central bank undertake during times of recession to help the economy? What are the pros and cons of fiscal and monetary policy?arrow_forwardWhich policy should be more effective to use during recession to increase spending and borrowing, or decrease spending and borrowing during high inflation. Explain?arrow_forwarda. What are the fiscal policy tools the government can use to expand an economy that is in a recession? Explain the interaction between monetary and fiscal policy?b. Explain how monetary policy is expected to affect investment and aggregate expenditure and discuss its connection with interest rates and output?arrow_forward
- what type of fiscal policy or monetary policy that is currently being implementedarrow_forwardwhat is a fiscal policy what is a monetary policy -give an example in todays economy. thanks for your timearrow_forwardare anti-inflationary policies effective when there are adverse supply shocks? which monetary or fiscal policy would be more effective?arrow_forward
- Would you say central banks are more reactive than proactive?arrow_forwardMost economists agree that individual consumers and business cannot pull the economy out of a severe recession without help from either the government or the Federal Reserve. Which group(s) believe fiscal policy is ineffective: Keynesians or Monetarists? Briefly explain the answer. Which group(s) believe monetary policy is ineffective in the short run: Keynesians or Monetarists? Briefly explain the answer. Which group(s) believe monetary policy is ineffective in the long run: Keynesians or Monetarists? Briefly explain the answer.arrow_forwardAssuming a constant money supply, government expenditures can be financed by which of the following? Check all that apply. Borrowing Money supply Interest rate Taxesarrow_forward
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