Principles of Macroeconomics (MindTap Course List)
7th Edition
ISBN: 9781285165912
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 23, Problem 3QCMC
To determine
Argument against setting policy by discretion.
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Students have asked these similar questions
If the U.S. Congress passes legislation to raise taxes to control inflation, what kind of policy is this?
Group of answer choices
A. Expansionary monetary policy
B. Contractionary fiscal policy
C. Contractionary monetary policy
D. Expansionary fiscal policy
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?
Help me please, Im confused. Does the effect of Monetary Policy can be seen much quicker than the effect of Fiscal Policy? Is there a example or prrof about it?
Chapter 23 Solutions
Principles of Macroeconomics (MindTap Course List)
Ch. 23.1 - Prob. 1QQCh. 23.2 - Prob. 2QQCh. 23.3 - Prob. 3QQCh. 23.4 - Prob. 4QQCh. 23.5 - Prob. 5QQCh. 23.6 - Prob. 6QQCh. 23 - Prob. 1QRCh. 23 - Prob. 2QRCh. 23 - Prob. 3QRCh. 23 - Prob. 4QR
Ch. 23 - Prob. 5QRCh. 23 - Prob. 6QRCh. 23 - Prob. 7QRCh. 23 - Prob. 8QRCh. 23 - Prob. 9QRCh. 23 - Prob. 10QRCh. 23 - Prob. 1QCMCCh. 23 - Prob. 2QCMCCh. 23 - Prob. 3QCMCCh. 23 - Prob. 4QCMCCh. 23 - Prob. 5QCMCCh. 23 - Prob. 6QCMCCh. 23 - Prob. 1PACh. 23 - Prob. 2PACh. 23 - Prob. 3PACh. 23 - Prob. 4PACh. 23 - Prob. 5PACh. 23 - Prob. 6PACh. 23 - Prob. 7PACh. 23 - Prob. 8PA
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- Assume the United States economy is in recession. (a) Explain the effect of the recession on: (i) short-run price level (ii) short-run output (iii) unemployment (b) If 78% of newly unemployed workers are optimistic that they can return to their jobs, what impact will that have on the macroeconomy? Explain. (c) Assume the United States implements a combination of expansionary fiscal and monetary policies. In the absence of complete crowding out, what will be the effect of these policies on each of the following? (i) Aggregate demand in the United States. Explain. (ii) The price level in the United States. Explain. (iii) Interest rates in the United States. Explain. (d) The US Government decides to enact $100 billion in fiscal stimulus. Assume that the marginal propensity to consume is 0.5. (i) What is the impact on GDP of $100 billion in government checks? (ii) What is the impact of GDP of $100 billion in government spending on infrastructure and purchases of agricultural…arrow_forward1. Increasing government spending when the economy is in a recession is an example of: A. active monetary policy B. active fiscal policy C. passive monetary policy D. passive fiscal policy 2. Because monetary and fiscal lags are long and variable: A. stronger policies must be used B. successful stabilization policy is completely impossible C. attempts to stabilize the economy are often destabilizing D. policy must be completely passivearrow_forwardIf the U.S. government's budget deficits are increasing aggregate demand, and the economy is producing at a level that is substantially less than potential GDP, then: a) government borrowing is likely to crowd out private investment. b) an inflationary increase in the price level is in real danger. c) the central bank might react with an expansionary monetary policy. d) higher interest rates will crowd out private investment.arrow_forward
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