A study conducted by Alberto Alesina and Lawrence Summers concluded that countries with had lower inflation rates than countries with Group of answer choices A. highly independent central banks; central banks that have little independence B. low rates of unemployment; high rates of unemployment C. no private banking system; an independent banking system D. a large government debt; little to no government debt
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- How does high inflation lead to a recession in the country? Explain the role ofthe Government and the Central Bank to address the economic recessionproblem by using appropriate fiscal and monetary policies.What is a key distinction between monetary policy and fiscal policy in economic management?A. Monetary policy involves government spending and taxation, while fiscal policy focuses on interestrates and money supply.B. Monetary policy is set by the central bank, while fiscal policy is determined by the government'sbudget decisions.C. Monetary policy primarily influences employment and economic growth, while fiscal policy mainlyaffects inflation.D. Monetary policy is a short-term strategy, while fiscal policy is a long-term approach to economicmanagement.stant, does this zero-inflation goal require that the rate of money growth equal zero? If yes, explain why. If no, explain what the rate of money growth should equal. 4. The economist John Maynard Keynes wrote in The Economic Consequences of the Peace (1919): "Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can con- fiscate, secretly and unobserved, an important part of the wealth of their citizens." Justify Lenin's assertion. 5. Suppose that a country's inflation rate increases sharply.. What happens to the inflation tax on the holders of money? Why is wealth that is held in savings accounts not subject to a change in the inflation tax? Can think of any way in which holders of savings accounts are hurt by the increase in the inflation rate? you 12 6. Hyperinflations are extremely rare in countries whose central banks are independent of the rest of the ernment. Why might…
- How does high inflation lead to a recession in the country? Explain the role ofthe Government and the Central Bank to address the economic recessionproblem by using appropriate fiscal and monetary policies. Are there anypotential problems with such policies? Please answer in detail and could you please add links off where you got the information.“I do not think it is an exaggeration to say history is largely a history of inflation, usuallyinflations engineered by governments for the gain of governments.” F.A Hayek.“The government solution to a problem is usually as bad as the problem and very oftenmakes the problem worse.” M. Friedman“Every government intervention [in the marketplace] creates unintended consequences,which lead to calls for further government interventions.” Ludwig von Misesa) The above quotes criticizes government interventionism to the economy. But,Keynesians believe that there is no way to stabilize the markets other than throughgovernment intervention (spending, taxes, planning and regulation). By givingreferences to the end of the Keynesian Era, explain why government interventionismhas lost its popularity after the 1970s.What is the ideal balance between monetary and fiscal policy for a nation like Japan, where prices are rising yet unemployment is under control? a. Decrease taxes, increase government spending and increase money supply b. Decrease taxes, decrease government spending and decrease money supplyc. None of these choice is correctd. Increase taxes, decrease government spending and decrease money supply
- 4 If inflation is so easy to explain, why do policymakers sometimes have trouble ridding the economy of it?What does the term exogenous money supply mean? a. The money supply is determined by external factors b. The money supply is controlled by households c. The money supply is determined by the central bank d. The money supply is determined by market forces.On June 5, 2003, the European Central Bank acted to decreasethe short-term interest rate in Europe by half a percentagepoint, to 2 percent. The bank’s president at the time, WillemDuisenberg, suggested that, in the future, the bank could reducerates further. The rate cut was made because European coun-tries were growing very slowly or were in recession. What effectdid the bank hope the action would have on the economy? Bespecific. What was the hoped-for result on C, I, and Y?
- Which of the following reduces the interest rate? a. a decrease in government expenditures and a decrease in the money supply b. an increase in government expenditures and an increase in the money supply c. an increase in government expenditures and a decrease in the money supply d. a decrease in government expenditures and an increase in the money supplyHow does an increase in money supply lin an economy lead to demand-pull inflation?Explain how can we use fiscal and monetary policy if we have a very high inflation rate inthe country