Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Chapter 16, Problem 1QR
To determine
Explain the inside lag and the outside lag.
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- *Does monetary or fiscal policy have a longer time lag? Why?arrow_forwardWhat was the primary policy advocated by the supply siders that could achieve both lower inflation and higher unemployment?arrow_forwardA stimulative monetary or fiscal action should increase aggregate demand. What factors may limit the actual increase in aggregate demand?arrow_forward
- Can you answer this for me?arrow_forwardHow does government or Fed recover the economy in the short run. Please use figures and words to illustrate your explanation.arrow_forwardWhat causes the lags in the effect of monetary and fiscal policies on aggregatedemand? What are the implications of these lags for the debate over active versuspassive policy?arrow_forward
- You read the following headline in the newspaper: "Lower tax rates have led to an increase in housing starts." Please assess if (a) this is fiscal or monetary policy (b) the policy is contractionary or expansionary (c) GDP will increase or decrease (d) Unemployment will increase or decrease This is blank1 - Word Answer Write your response here... (fiscal/monetary) policy. This policy is blank2 - Word Answer Write your response here... (expansionary/contractionary). It will lead to a(n) blank3 - Word Answer Write your response here... (increase/decrease) of GDP while unemployment will tend to blank4 - Word Answer Write your response here... (increase/decrease).arrow_forwardAs you have learned in Unit 8 (this week), monetary and fiscal policy play important roles in economic stimulation and or stabilization. In this regard: a. When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy? b. When is it inappropriate to use monetary and fiscal policy to stimulate or stabilize the economy? c. What specific fiscal policy tools would you use to stimulate aggregate demand and how? d. What specific monetary policy tools would you use to stimulate aggregate demand and how? e. What is your conclusion, should policymakers use the monetary and or fiscal policy to stimulate aggregate demand? Explain briefly.arrow_forwardWhich policy is more effective—monetary policy or fiscal policy? Why?arrow_forward
- What are the definition and examples of aggregate demand?arrow_forwardWhat is the difference between fiscal and monetary policy? What fiscal and monetary steps can the government and the central bank undertake during times of recession to help the economy? What are the pros and cons of fiscal and monetary policy?arrow_forwardWhich of the following is true of monetary policy? a. If the Fed wants to increase the money supply, it should increase the interest rate it pays banks on their reserves. b. The long and variable lags between a shift in monetary policy and when the policy shift affects output and employment makes it easier for the Fed to time monetary policy properly. c. A monetary policy that maintains price stability provides the foundation for both economic stability and the smooth operation of a market economy. d. The Fed should try to push real interest rates to the lowest possible level in order to stimulate investment and aggregate demand.arrow_forward
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