The economy is experiencing a recession. The output gap is hovering at 7%, causing higher-than-normal unemployment. Using
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The economy is experiencing a recession. The output gap is hovering at −7%, causing higher-than-normal unemployment. Using the Fed model, compare and contrast how monetary policy and fiscal policy can impact the economy. What can the Federal Reserve do to stimulate greater output and hence employment? What can the federal government do? What happens if both monetary and fiscal policy are used?
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Answer In a recessionary environment with an output gap of 7 and higherthannormal unemployment both monetary and fiscal policies can be used to stimulate the economy although they operate through diff...View the full answer
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Related Book For 
Principles Of Economics
ISBN: 9781319330156,9781319419769
2nd Edition
Authors: Betsey Stevenson, Justin Wolfers
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