Q6. (10 points) For each of the following policies indicate whether the policy i
ID: 1107160 • Letter: Q
Question
Q6. (10 points) For each of the following policies indicate whether the policy is (i) an active or a passive policy, and (ii) a policy by rules or with discretion: a. The central bank follows a policy of allowing the money supply to grow at a b. A government follows a policy of keeping government spending over a c. The central bank uses judgment to adjust the growth of the money supply constant 4 percent per year calendar year equal to government revenue over the calendar year; based on expectations of what will happen to output and inflation over the next five years. d. The gvweament keps tax laws unchanging andalows ovemment spending to change, depending on which spending bills are passed by the legislature. The central bank follows a policy of adjusting the money supply according to a formula based on deviations of unemployment from the natural rate of unemployment. e.Explanation / Answer
a). Answer :- Passive policy and a policy by rules.
b). Answer :- Passive policy and a policy by rules.
c). Answer :- Active policy and a policy by discretion.
d). Answer :- Passive policy and a policy by discretion.
e). Answer :- Active policy and a policy by rules.
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