A reduction in income will cause a reduction in the interest rate. 2. In the wage-setting relation, the nominal wage tends to decrease when the unemployment rate decreases. 3. If the output is too high, to achieve the medium-run equilibrium, the central bank will reduce policy rate. 4. When in fiscal contraction consumption, output and the interest rate will decrease. Explain each statement whether T/F elaborately..

A reduction in income will cause a reduction in the interest rate. 2. In the wage-setting relation, the nominal wage tends to decrease when the unemployment rate decreases. 3. If the output is too high, to achieve the medium-run equilibrium, the central bank will reduce policy rate. 4. When in fiscal contraction consumption, output and the interest rate will decrease. Explain each statement whether T/F elaborately..

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 8PA

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