Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 12, Problem 6PA
(a)
To determine
The mix of fiscal and
(b)
To determine
The impact of tax cut and the tight monetary policy on the economy.
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What is a key distinction between monetary policy and fiscal policy in economic management?A. Monetary policy involves government spending and taxation, while fiscal policy focuses on interestrates and money supply.B. Monetary policy is set by the central bank, while fiscal policy is determined by the government'sbudget decisions.C. Monetary policy primarily influences employment and economic growth, while fiscal policy mainlyaffects inflation.D. Monetary policy is a short-term strategy, while fiscal policy is a long-term approach to economicmanagement.
What is the ideal balance between monetary and fiscal policy for a nation like Japan, where prices are rising yet unemployment is under control?
a. Decrease taxes, increase government spending and increase money supply b. Decrease taxes, decrease government spending and decrease money supplyc. None of these choice is correctd. Increase taxes, decrease government spending and decrease money supply
a) Discuss monetary policy and fiscal policy by comparing and contrasting their effects in the short run and in the long run.
b) Why do we say that monetary policy is neutral in the long run? If so, why is it being used and considered as useful?
c) Can we say that fiscal policy is neutral as well?
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