77. If unemployment is above the natural rate, a correct mix of monetary and fis

Question

77. If unemployment is above the natural rate, a correct mix of monetary and fiscal policy may be to a. Decrease the money supply and increase tax rates b. Decrease government spending and increase interest rates c. Increase the money supply and increase government spending d. Raise the discount rate and lower tax rates 8. How successful have policymaker's been at maintaining low inflation and low unemployment since WWIl? a. Very successful b. The economy has experienced low inflation since 1960 c. Unemployment has been relatively low since 1974 d. Recessions have continued to occur despite fiscal and monetary policy actions . The time it takes for an action taken by policymakers to impact the economy is an a. Inside lag b. Interest lag c. Outset lag d. Outside lag

Explanation / Answer

77. c) is correct answer

Unemployment is above natural rate that means we will have to increase employment rate to make it to natural rate of unemployment ,hence increase in money supply and increasing government spending shifts is and LM curve towards right side which certainly increase employment level.

78 d) is correct answer

The most obvious answer from the given options is that the recession has been continuously occurring despite fiscal and monetary policy .

79d) is the correct answer

The time it takes for the economy to see its effect is known as outside lag.

The time it takes to recognise a problem and find its solution is known as inside lag .

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