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.

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.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter32: Macroeconomic Policy Around The World

Section: Chapter Questions

Problem 9SCQ: Show, using the AD/AS model, how governments can use monetary policy to decrease the price level.

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Question

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.

Definition Definition Policy implemented by the central bank of a country (such as the Federal Reserve in the United States) to achieve certain macroeconomic objectives. Monetary policy is a supply-side macroeconomic policy that supervises the growth rate and money supply in the economy.

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