Question Description
technological growth (low unemployment and low inflation)(high unemployment and inflation)
[this is when the LRAS shifts right]
1. Write out a potential cause of the situation
2. Discuss what the best policy option is for fiscal policy for both government spending and taxes
2.A what goal are you trying to achieve?
3. Discuss what the best policy option is for monetary policy in terms of reserve requirements and the discount rate
3.a. what will those policies do to GDP, inflation, and unemployment
3.b describe in your own word the multiplier or crowding out.
4. Does the federal reserve want to buy or sell or bonds to achieve the above result
4.a what does this do to the price of bonds and the interest rate
5. What would happen if no policy action was taken. Explain it in terms of changes in wages.
5.a what will happen to GDP, inflation, and unemployment with no policy
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