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Given the following information about the economy, determine the appropriate economic policy as well as the expected impact of the given policy: Percent change in
Given the following information about the economy, determine the appropriate economic policy as well as the expected impact of the given policy: Percent change in gdp - 7% Unemployment rate - 2.7% Inflation - 5.3% Economy is in an expansion and unemployment is low, so no policy is needed The economy may be in danger of overheating so contractionary policy may be needed to lower inflation. Fed should sell bonds, increase reserve requirement, or increase discount rates, this would shift ad to the left Economy may be in danger of recession because change in real GDP is low. The Fed should buy bonds, decrease reserve requirements or decrease the discount rate. This would shift ad to the right Economy may be in danger of overheating so expansionary policy may be needed. Government should decrease taxes or increase spending this would shift
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