The author explains why the economic stimulus plan of U.S. President Barack Obama will result in inflation and stagnant economy. He discusses the economic principles that govern such move by the government to inject money into the financial system to revive the economy from recession. He points ...
Disinflation.A falling rate of inflation or slowdown in the rise in prices of goods and services. Reflation.A way to curb deflation, when a government purposely stimulates the economy by increasing the money supply or government spending — such as the COVID stimulus payments. Reflation can also...
Stagflation is particularly troublesome because the traditional tools that address one problem typically worsen the others. A tightmonetary policy(increasing interest rates) to fight inflation typically slows growth and thus increases unemployment, while stimulus measures (increasing government spending) to bo...
The second sentence had me a little confused. Tyler had just quoted some material from Stock and Watson pointing to the structural factors in the slow recovery. This is certainly consistent with market monetarism, as we do not think monetary stimulus can magically increase the trend rate of labo...
Why does the inflation-unemployment trade-off disappear in the long run? Inflation-unemployment: Inflation- unemployment trade-off refers to the relationship between the unemployment rate and inflation rate. This relationship only lasts for a short period, but over the long-run, the relation...
To illustrate how the government can use fiscal policy to affect the economy, consider an economy that's experiencing arecession. The government might issue tax stimulus rebates to increaseaggregate demandand fuel economic growth. The logic behind this approach is that when people pay lower taxes,...
Does fiscal policy cause inflation? In the same way that fiscal and monetary policy impact GDP, they also impact aggregate demand. Fiscal policyimpactsgovernment spending and tax policy, while monetary policy influences the money supply, interest rates, and inflation. ...
How does supply and demand affect housing prices? Why has the use of discretionary fiscal policy declined? How do government regulations affect supply and demand? What is the total impact on aggregate demand of a fiscal stimulus? What is price effect in economics?
The Shanghai stock market was up 4.5% in very nervous trading today but down 16.3% since its recent peak at 3478 on August 4, and still trading at more than 30 times earnings. All this turmoil is triggering all sorts of worried comments about the sustainability of the fiscal stimulus packa...
Why doesn't the minimum wage cause more layoffs? Why does unemployment tend to change when the level of output changes? Why does the inflation-unemployment trade-off disappear in the long run? Why do sticky wages and prices increase the impact of an economic downturn on unemployment and...