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: Cengage Learning
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Chapter 15, Problem 2CQ
To determine
Compare the instability during the past sixty years with instability prior to World War II and identify the evidence.
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What is the difference between the Keynesian and rational expectation theories concerning the success of stabilization policy?
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Economics: Private and Public Choice (MindTap Course List)
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- are anti-inflationary policies effective when there are adverse supply shocks? which monetary or fiscal policy would be more effective?arrow_forwardAnswer the following questions about stabilization policy. What do we mean by stabilization policy? Why do some policymakers support active stabilization policy? Why do some policymakers prefer a passive approach?arrow_forwardWhy do economists often disagree about the conduct of macroeconomic stabilization policy?arrow_forward
- Use the IS/MP framework to explain the impact of stabilization policy to correct for a negative output in the short-run.arrow_forwardSuppose three economies are hit with the same negative supply shock. In country A, inflation initially rises and output falls; then inflation rises more and output increases. In country B, inflation initially rises and output falls; then both inflation and output fall. In country C, inflation initially rises and output falls; then inflation falls and output eventually increases. What type of stabilization approach did each country take? The answer choices for each country are: Stabilize inflation, stabilize output, or do nothingarrow_forwardUse the AD/AS framework to explain the impact of stabilization policy to correct for a negative output gap in the short-run.arrow_forward
- Which one is better at dealing with inflation: demand-side or supply side policies?arrow_forwardAnalyze and compare fiscal and monetary policy in order the generate macroeconomic stability.arrow_forwardDuring the 2008-2011 financial crisis, two members of Congress proposed reinstituting the military draft as a solution to high unemployment, citing the experience of World War II. Would this have been a viable policy option? Discuss.arrow_forward
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