Define the term stabilization policy and describe how it can be used to reduce the volatility of economic growth and inflation. Do stabilization policies improve everyone's welfare?
Answer to relevant QuestionsExplain why stabilization policies are usually pursued using monetary rather than fiscal policy. Starting with the economy in long-run equilibrium, use the aggregate demand-aggregate supply framework to illustrate what would happen to inflation and output in the short run if there were a rise in consumer confidence in ...*Consider a previously closed economy that opens up to international trade. Use the aggregate demand-aggregate supply framework to illustrate a situation where this would lead to lower inflation in the long run. In the past, policymakers occasionally became aware of a recession only well after it began. Can they do better? Plot the probability of a recession from a statistical model (FRED code: RECPROUSM156N). To what extent could ...Many economists have argued that Japan’s economic problems during the 1990s were caused largely by bank failures and the failure of the Japanese government to clean up the banking system. Explain how a collapse of the ...
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