4. Policy issues . Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a decade; however, monetary policymakers are slow to recognize that the change is to potential-not current-output and they interpret the decrease in output as a recession that leads current output to fall below potential output. In this scenario, what likely are the responses from policy makers? What is possible consequence?
4. Policy issues . Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a decade; however, monetary policymakers are slow to recognize that the change is to potential-not current-output and they interpret the decrease in output as a recession that leads current output to fall below potential output. In this scenario, what likely are the responses from policy makers? What is possible consequence?
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter36: Six Debates Over Macroeconomic Policy
Section: Chapter Questions
Problem 3PA
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