Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 29, Problem 3.4P
To determine
Macro economic effects of the spending and tax changes, when the government tries reduce the deficit.
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You are advising the Bank of Canada and the Federal Government. The economy is in a state of contraction.
a) Determine the monetary policy actions that you would recommend and explain how these actions will help to turn the economy around.
b) Determine the fiscal policy measures that you would recommend and explain how these actions will help to turn the economy around.
What is supply-side economics? Does it oppose the Classical, Keynesian, or Monetarist theory? How does supply-side economics affect fiscal policy?
Read the following quote and explain in complete sentences whether it discusses fiscal policy, monetary policy or both.
“Taking substantial action at this point, though, would send what could be a negative message to the market — that the balance sheet runoff, which former Chair Janet Yellen said would be ‘like watching paint dry,’ is running into snags and requires corrective action. However, the Fed would have no choice if there are indications that it can't control the market movements, particularly considering the record level of Treasury debt the government has issued this year.”
Chapter 29 Solutions
Principles of Economics (12th Edition)
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