If you were a policy maker and were faced with the issues below, identify what you would recommend be done (increase/decrease; buy/sell) using each tool for the scenario (answer on each line). Suppose that the natural rate of unemployment is 4%.
#1 Unemployment = 10%; Inflation = 1%
Fiscal Policy -- Business Taxation _______________________________
Household Taxation ______________________________
Government Expenditures _________________________
Monetary Policy -- OMO _________________________________________
Discount Rate __________________________________
Reserve Ratio __________________________________
Explain logic ___________________________________________________
#2 Unemployment = 1%; Inflation = 10%
Fiscal Policy -- Business Taxation _______________________________
Household Taxation ______________________________
Government Expenditures _________________________
Monetary Policy -- OMO _________________________________________
Discount Rate __________________________________
Reserve Ratio __________________________________
Explain logic ___________________________________________________
#3 Unemployment = 10%; Inflation = 10%
Fiscal Policy -- Business Taxation _______________________________
Household Taxation ______________________________
Government Expenditures _________________________
Monetary Policy -- OMO _________________________________________
Discount Rate __________________________________
Reserve Ratio __________________________________
Explain logic ___________________________________________________
#4 Unemployment = 4%; Inflation = 1%
Fiscal Policy -- Business Taxation _______________________________
Household Taxation ______________________________
Government Expenditures _________________________
Monetary Policy -- OMO _________________________________________
Discount Rate __________________________________
Reserve Ratio __________________________________
Explain logic ___________________________________________________
If you were a policy maker and were faced with the issues below, identify what you would recommend be done (increase/decrease; buy/sell) using each tool for the scenario (answer on each line). Suppose that the natural rate of unemployment is 4%.
#1 Unemployment = 10%; Inflation = 1%
Fiscal Policy -- Business Taxation _______________________________
Household Taxation ______________________________
Government Expenditures _________________________
Monetary Policy -- OMO _________________________________________
Discount Rate __________________________________
Reserve Ratio __________________________________
Explain logic ___________________________________________________
#2 Unemployment = 1%; Inflation = 10%
Fiscal Policy -- Business Taxation _______________________________
Household Taxation ______________________________
Government Expenditures _________________________
Monetary Policy -- OMO _________________________________________
Discount Rate __________________________________
Reserve Ratio __________________________________
Explain logic ___________________________________________________
#3 Unemployment = 10%; Inflation = 10%
Fiscal Policy -- Business Taxation _______________________________
Household Taxation ______________________________
Government Expenditures _________________________
Monetary Policy -- OMO _________________________________________
Discount Rate __________________________________
Reserve Ratio __________________________________
Explain logic ___________________________________________________
#4 Unemployment = 4%; Inflation = 1%
Fiscal Policy -- Business Taxation _______________________________
Household Taxation ______________________________
Government Expenditures _________________________
Monetary Policy -- OMO _________________________________________
Discount Rate __________________________________
Reserve Ratio __________________________________
Explain logic ___________________________________________________
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