Consider the data in the Focus Box, Deflation in the Great Depression. a. Do you believe that

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Consider the data in the Focus Box, "Deflation in the Great Depression."

a. Do you believe that output had returned to its potential level in 1933?

b. Which years suggest a deflation spiral as described in Figure 9-3?

Figure 9-3

image text in transcribed

c. Make the argument that if the expected level of inflation had remained anchored at the actual value of inflation in 1929 , the Great Depression would have been less severe.

d. Make the argument that a substantial fiscal stimulus in 1930 would have made the Great Depression less severe.

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Macroeconomics

ISBN: 9780133780581

7th Edition

Authors: Olivier Jean Blanchard

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Question Posted: Mar 04, 2024 11:00 AM

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Consider the data in the Focus Box, Deflation in the Great Depression. a. Do you believe that

Question:

Change in inflation rate Real interest rate, r ST 0 T-T(-1) A A Y Y' Yn Output, Y A' Yn Output, Y PC IS

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Macroeconomics

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