How does high inflation lead to a recession in the country? Explain the role of the Government and the Central Bank to address the economic recession problem by using appropriate fiscal and monetary policies. Are there any potential problems with such policies? Please answer in detail

How does high inflation lead to a recession in the country? Explain the role of the Government and the Central Bank to address the economic recession problem by using appropriate fiscal and monetary policies. Are there any potential problems with such policies? Please answer in detail

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter15: The Debate Over Monetary And Fiscal Policy

Section: Chapter Questions

Problem 8DQ

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Question

How does high inflation lead to a recession in the country? Explain the role of
the Government and the Central Bank to address the economic recession
problem by using appropriate fiscal and monetary policies. Are there any
potential problems with such policies? Please answer in detail

Definition Definition Policy implemented by the central bank of a country (such as the Federal Reserve in the United States) to achieve certain macroeconomic objectives. Monetary policy is a supply-side macroeconomic policy that supervises the growth rate and money supply in the economy.

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