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I need help on these two problems. Thank you. 1. Comparing Fiscal Policy and Monetary Policy a. Assume an economy is in a recession. Identify
I need help on these two problems.
Thank you.
1. Comparing Fiscal Policy and Monetary Policy a. Assume an economy is in a recession. Identify how fiscal policy can be used to close the recessionary gap. Compare this to monetary policy - identify the three tools the central bank can use to return the economy to full employment. b. Assume an economy is experiencing inflation. Identify the three things the central bank can do to fight inflation and how they affect investment and consumption. Explain why monetary policy might be used to fight inflation rather than fiscal policy. 2. Assume an economy is in a recession and the government increases deficit spending. Draw the market for loanable funds and identify what will happen to the real interest rates and the quantity of loansStep by Step Solution
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