Using the dynamic aggregate demand and aggregate supply model, illustrate and explain the impact of following policy decisions on income, unemployment and inflation in India in both short-run and long-run. Part (a) The Federal Government is lowering taxes to help people navigate the higher cost of living. Part (b) The Reserve Bank of India (RBI) is closely monitoring the high inflationary pressure due to a surge in demand in the post-COVID situation and contemplating a suitable policy action. Explain and illustrate what policy stance should the RBI take and how would that remedy the problem.

Using the dynamic aggregate demand and aggregate supply model, illustrate and explain the impact of following policy decisions on income, unemployment and inflation in India in both short-run and long-run. Part (a) The Federal Government is lowering taxes to help people navigate the higher cost of living. Part (b) The Reserve Bank of India (RBI) is closely monitoring the high inflationary pressure due to a surge in demand in the post-COVID situation and contemplating a suitable policy action. Explain and illustrate what policy stance should the RBI take and how would that remedy the problem.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 4PA

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