Nobel prize-winning economist Milton Friedman once had the following statement: "In- flation is always and everywhere a monetary phenomenon." Another Nobel prize-winning economist, Tom Sargent, had the following statement: “Persistent high inflation is always and everywhere a fiscal phenomenon." Are the two statements inconsistent with each other? Explain.

Nobel prize-winning economist Milton Friedman once had the following statement: "In- flation is always and everywhere a monetary phenomenon." Another Nobel prize-winning economist, Tom Sargent, had the following statement: “Persistent high inflation is always and everywhere a fiscal phenomenon." Are the two statements inconsistent with each other? Explain.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter7: Inflation

Section: Chapter Questions

Problem 13SQ

See similar textbooks

Similar questions

Explain what Tom Sargent meant when he asserted, "Inflation is always and everywhere a fiscal phenomenon." In particular, make sure to discuss how this quote relates to episodes of hyperinflation
Briefly explain in a paragraph or two why you would rather be a borrower during a period of unexpected rising inflation, and a lender during a period of unexpected declining inflation.
Demand-pull inflation can develop when...
Which of the following is a policy tool used to combat demand-pull inflation? a) Contractionary fiscal policy b) Expansionary monetary policy
Suppose an economist believes that the price level in the economy is directly related to the money supply, or the amount of money circulating in the economy. The economist proposes the following relationship: P=A×MP=A×M • P=Price LevelP=Price Level • M=Money SupplyM=Money Supply • A=A composite of other factors, including real GDP, that change very slowly over time.A=A composite of other factors, including real GDP, that change very slowly over time. How might an economist gather empirical data to test the proposed relationship between money and the price level?
What does it mean when we say that the inflation gap isnegative?
Economists sometimes argue that moderate inflation may help the economy by making wages in labor markets more ["", "", ""] . The discussion in the text pointed out that wages tend to be sticky in their downward movements and that unemployment can result. A little inflation could nibble away at ["", ""] wages, and thus help real wages to ["", ""] if necessary. In this way, even if a moderate or high rate of inflation may act as sand in the gears of the economy, perhaps a low rate of inflation serves as oil for the gears of the labor market. This argument is controversial. A full analysis would have to account for all the effects of inflation. It does, however, offer another reason to believe that, all things considered, very low rates of inflation may not be especially harmful.
Some economists argue that policymakers can use monetary and fiscal policy to reduce the severity of economic fluctuations. In practice, however, there are obstacles to the use of such policies. What are the primary difficulties with using monetary and fiscal policy to stabilize the economy?
Hello, I need help with a macroeconomics question. Thank you in advance! The answers are based on a short exerpt from the Federal Reserves press release from Feb 1, 2023 (attatchde below). 7. What do you expect to happen to the money supply? 8. What do you expect to happen to the inflation rate? 9. How would you expect all these decisions to affect employment in the economy? 10. How do the effects you found on 8 and 9 align with what the Fed was hoping to attain?
Why is there no upward or downward pressure on the inflation rate when the economy is at full employment?
The US government has recently announced and started to implement a large-scale fiscal expansion to mitigate the negative effects of the coronavirus pandemic and reboot the US economy. The Biden administration argued that this fiscal stimulus policy can rapidly accelerate the economic recovery without triggering high levels of inflation. How is the effect of US fiscal stimulus policy in terms of its possible effect on inflation.