1. Would a floating exchange rate have imposed no constraint at all on expansionist policies? 2. Address...
Question:
1. Would a floating exchange rate have imposed no constraint at all on expansionist policies?
2. Address the Keynesian responses from a monetarist perspective.
3. Go through each of the above causes of the stagflation of the 1970s and early 1980s and consider whether there were any policies that the government could realistically have adopted to deal with it.
4. In what way was the stop–go policy of the late 1980s different from the stop–go policies pursued during the 1950s and 1960s?
5. Will targeting the exchange rate help to reduce inflation? Does it depend on the rate of inflation in the countries to whose currencies the pound is fixed?
6. If tax increases are ‘phased in’ as the economy recovers from recession, how will this affect the
magnitude and timing of the recovery?
7. From 1998 to 2007 the exchange rate of sterling was very high. This was largely the result of the MPC keeping interest rates above those in other countries in order to try to keep inflation down to its target. What are the arguments for and against a discretionary rise in the inflation target in such circumstances?
Exchange RateThe value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
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