Consider a closed economy, Lone. To tackle the severe recession, her government conducts a tax rebate to the households. Assume that the Constitution of Lone requires the central bank to “assist the government in achieving her economic goals”. How should the central bank react

Consider a closed economy, Lone. To tackle the severe recession, her government conducts a tax rebate to the households. Assume that the Constitution of Lone requires the central bank to “assist the government in achieving her economic goals”. How should the central bank react

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:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter9: An Introduction To Basic Macroeconomic Markets

Section: Chapter Questions

Problem 11CQ

See similar textbooks

Related questions

Q: For this economy to produce Y1 and sustain it without inflation a) the price of oil must increase.…

A: The long run market equilibrium level is one where the aggregate demand (AD), short run aggregate…

Q: Please use the AD-AS model to analyze the effects of monetary policy and fiscal policy on economic…

A: The actions by the monetary authorities/government to either expand or tighten the economy and its…

Q: D4) Finance please describe the fdi inflow in zimbabwe as a percentage of gdp and explain the…

A: Foreign direct investment FDI which is foreign direct investment refers to the investment of capital…

Q: What is an example of federal investment? a. Federal reserve monetary policy, specifically selling…

A: Federal investment It's the fraction of federal spending that is designed to provide long term…

Q: a.Explain the condition of an economy experiencing a decrease of 3% in aggregate expenditure. b.…

A: The Keynesians hold that wages are sticky such that they do not change in the downwards direction…

Q: eping the balance of payments in equlibrium :  State why governments / decision makers try to…

A: The two macroeconomic objectives being selected are economic growth and inflation.Economic growth is…

Q: The economic situation just prior to the COVID-19 crisis (a) The economy was still very weak in…

A: Covid-19 pandemic brings about changes in the economic structure. The unemployment rate shot up and…

Q: Ruritania's economy has been enjoying positive but slowing growth. The Ministry of Economics is…

A: we can place the options in the appropriate column according to weather it will most likely lead…

Q: a) In Japan, from the 1990s to the late 2000s, the interest rates fell to very low levels. However,…

A: a. Liquidity trap caused people to expect a higher real interest in the future. That discouraged…

Q: What are the three important macroeconomic goals about which most economists, and society at large,…

A: Macroeconomics: It relates to the whole economy.

Q: Outline the appropriate fiscal and monetary policy measures required to restore this economy to full…

A: GDP = C + I + G + X - M GDP in 2019 = 47.9 + 18 + 0 + 20.2 - 28.5 = 57.6 GDP in 2020 = 35.8 + 16.2 +…

Q: Consider the neo-classical approach to macroeconomics. What does that theory suggest will happen…

A: A recession occurs when the economy's actual output is exceeded by its potential output. The…

Q: Assume a technological advance lead to lower production costs. Show the effect this will have on…

A: Meaning of Aggregate Demand and Aggregate Supply: The term aggregate demand refers to the…

Q: Consider a loanable funds market of Pakistan. Suppose, if government want to implement the policy to…

A: Loanable funds market shows the relationship between interest rate and the quantity of funds…

Q: Consider a closed economy, Lone. To tackle the severe recession, her government conducts a tax…

Q: Consider the following shocks: A. The government cuts the personal income tax B. Firms expect a…

A: 1. AE = C + I + G + NX Consumption (C) is the total amount of money spent by a household over a…

Q: In the short-run framework, budget deficits should: Choose correct and explain why never be run…

A: A budget deficit refers to a condition when government expenses exceed government revenue.

Q: The government of your country has gradually outlined measure to ease an opening of the economy. The…

A: The measures that can be adopted: Fiscal Policy changes: Central banks should use expansionary…

Q: According to Eichengreen’s account in Exorbitant Privilege, what proposals by Keynes did the US…

A: The 'exorbitant privilege' of the US dollar is in jeopardy. The United States came dangerously near…

Q: The advent of the word processor reduced the time it takes to write and revise documents. This has…

A: Both technological expertise and data relevant to manufacturing practises are used to assemble Scar…

Q: Government sometimes intervene to stabilize the economy. As such, briefly explain why the Bangko…

A: It can be seen that the government plays a significant role in stimulating the economy by changing…

Q: Explain what will happen in a nation that tries to solve a structural unemployment problem using…

A: Note : Hello dear student. As you have asked multiple questions. I am going to answer first question…

Q: Hi, can I please get help with the picture in the attachements its true and false. I’m not so good…

A: The statement “Japan’s economy met its expected growth rate of 2%” is false. Reason: Even though the…

Q: Which one of the following shocks can decrease prices and cause unemployment to rise? a) decrease…

A: Due to an increase in government loans or contractionary monetary policy, the interest rate in an…

Q: four primary goals governments strive to achieve in order to improve country's macroeconomy and…

A: Four primary goals that a government strive to achieve in order to improve country's macroeconomics…

Q: 1) Explain what will happen in a nation that tries to solve a structural unemployment problem using…

A: * ANSWER :- *(1)

Q: John Maynard Keynes was the first to show that government policy could be used to change aggregate…

A: John Maynard Keynes is considered to be the most important and popular economist of the early…

Q: Why do leaders of less-developed countries often run very large deficits and print entirely too much…

A: The budget deficit has occurred when the government spend more than the collection of revenue. There…

Q: (a) How do you think the above impacted Real GDP and the inflation rate? (b) Do you think the…

A: In the beginning of year 2020, when the pandemic hit the world, the world was devastated. The impact…

Q: HOW AND WHY WAS THE PROSPERITY AND ECONOMY OF THE 1950’S AND EARLY 1960’S SOUNDER AND MORE STABLE…

A: The prosperity and economy of the 1950s and early 1960s was sound and more stable than that of the…

Q: The president has to make any changes to the economy through the U.S Mint? True or False

A: The purpose of the country U Mint is to manufacture, collect, and distribute precious metals,…

Q: A few weeks ago, President Biden introduced a $2 trillion plan to fix America's infrastructure and…

A: According to me, already America is a developed economy when it comes to basic infrastructure but…

Q: Who is the new prime minister of Japan ?

A: The Japanese Government is the country's national government. The Japanese government is divided…

Q: . Assume that we are at the natural rate of GDP, meaning we do not have a recession or an expansion,…

A: Interest rate and investment has inverse relationship that means when the central bank increase the…

Q: Suppose you heard on the news that the three sectors of a closed economy are all spending more but,…

A: There must have been increase in aggregate supply as well.

Q: Which of the following is not true? O Milton Friedman believes that economic growth should be…

A: Monetary policy is a macroeconomic tool that is used by the central bank to control the supply of…

Q: Draw the aggregate demand model for India’s economy (open economy) with the impacts of government…

A: We have to draw the aggregate demand model for India's economy with the impacts of government…

Q: Due to Corona Virus epidemic in Bangladesh, Government tax collection has declined, but government’s…

A: The government faces deficit when the government revenue is less than the government expenditure,…

Q: The government of Prime Minister Shinzo Abe said it would oﬀer some $15 billion in ﬁnancing for…

A: 1. Japan being the third largest GDP earner,plan to boost economy amidst corona virus pandemic by…

Q: With COVID-19, many economies suffered from severe recession. To save their economies, a mix of…

A: Monetary policies are the tools of Central Bank of the country while the fiscal policies are the…

Q: Match each statement with the School of Thought that best fits. The focus of macroeconomic policy […

A: 1) Increase in incentives for households and businesses to work, save and invest falls under the…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Consider a closed economy, Lone. To tackle the severe recession, her government conducts a tax rebate to the households. The Constitution of Lone requires the central bank to “assist the government in achieving her economic goals”. During time of recession, should the central bank of Lone stick to the Constitution? Why or why not? Argue briefly.
How does high inflation lead to a recession in the country? Explain the role of the government and the central bank to address the economic recession problem by using appropriate fiscal and monetary policies. Are there any potential problems with such policies?
The government is seeking to directly borrow money from the central bank in order to invest in a large infrastructure project that could help improve the livelihood of its citizens. Should the central bank agree to lend to the government? why or why not?
It is argued that the central bank should be independent of the government. Discuss these arguments.
How does the introduction of adjustment cost and imperfect competition alter the modelling of investment? “Even now that most monetary policy is conducted by independent monetary authorities, there is still the problem that politicians may pursue fiscal policies that are incompatible with stable inflation”. Briefly discuss this assertion with respect to Ghana.
Does the sole focus on infation mean that the central bank doesn’t careabout short-run output in some sense?
"The government must, therefore, introduce a sovereign bank that will shoulder the role of credit creation from commercial banks and ensure all lending contributes to the real economy.” Based on the statement above, it shows that financial system is important in balances the total financial assets to total liabilities. Explain.
How does high inflation lead to a recession in the country? Explain the role ofthe Government and the Central Bank to address the economic recessionproblem by using appropriate fiscal and monetary policies.
In the short-run framework, budget deficits should: Choose correct and explain why never be run since they slow economic growth over the long run. never be run since they crowd out investment in the short run. be run on a temporary basis whenever the economy is below potential output. be run on a permanent basis since they can always be financed by printing money.
Determine whether these actions are Monetary Policy or a Fiscal Policy. What are the actions taken by the central banks and IMF to address the existing financial problems?
Enlist the main points that how the central bank of a country plays its significant role in the economic development of the country.
Using the macroeconomic environment where banks sources its inputs and to which it sells its outputs. Relate this to both the domestic market and the foreign sector.