You are the liaison between the Federal Reserve Board and the U.S. Treasury Department. Your goal is to coordinate policy efforts to achieve full-employment output in the economy while keeping a fixed real interest rate. You must recommend tightening or easing both monetary and fiscal policies to do this. What would your recommendation be in each of the following situations?(a)People decide to increase saving.(b)Expected inflation declines.(c)The future marginal productivity of capital declines.(d)There's an adverse oil price shock in which the LM curve moves farther to the left than does the FE line.
What will be an ideal response?
| (a) | Loosen fiscal policy, no change in monetary policy |
| (b) | Ease monetary policy, no change in fiscal policy |
| (c) | Ease fiscal policy, no change in monetary policy |
| (d) | Tighten fiscal policy, ease monetary policy |
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A. horizontal. B. upward sloping. C. vertical. D. downward sloping.
Which of the following refers to dumping?
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What will be an ideal response?