Question
1. How do monetary and fiscal policy affect output and interest rates? 2. Assume the economy is in a recession and you want to grow
1. How do monetary and fiscal policy affect output and interest rates? 2. Assume the economy is in a recession and you want to grow output. What are the choices for fiscal and/or monetary policy? What combination do you recommend? 3. Assume you are both running the central bank and a very close friend of the prime minister. Assume the economy is not in a recession (U = NAIRU), but you want a boom so your friend is re-elected. What monetary policy should you run a year before the election? What are the risks of this decision? 4. Bring to class a recent newspaper article about monetary policy. Relate it to our models.
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