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What fiscal policy would cure high inflation and high unemployment?
Wiki User
∙ 9y ago
A fiscal policy that focuses on job creation would cure high inflation and high unemployment. Implementing projects like road and bridge construction would improve employment rates.
Wiki User
∙ 9y ago
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What is the aim of Fiscal policy?
One of the major uses of government fiscal policy is to create stability in the economy. To curb inflation would be another use of fiscal policy.
If policy makers are worried about inflation what would be a correct fiscal policy change?
A fiscal policy solution to inflation would be to either increase taxes or decrease government spending.increase the tax rate
How can the federal government use fiscal policy to combat unemployment?
The government can cut taxes. This would put more money into the hands of theAmerican citizens, which would get the economy moving a little more and allow business owners to hire on more employees.
Where is fiscal policy used?
Fiscal policy is used by the government mainly in the following ways; by taxation and spending. This is how it is done. To increase GDP, the government increases its budget, spends say $45 billion into the economy which is an expansionary policy. Whereas, if the government takes out $45 billion, it would mean a decrease in jobs, increased unemployment, this is known as contractionary.
If inflation falls why would unemployment rise?
When economists look at inflation and unemployment in the short term, they see a rough inverse correlation between the two. When unemployment is high, inflation is low and when inflation is high, unemployment is low. This has presented a problem to regulators who want to limit both. This relationship between inflation and unemployment is the Phillips curve. The short term Phillips curve is a declining one. Fig 2.4.1-Short term Phillips curveThis is a rough estimation of a short-term Phillips curve. As you can see, inflation is inversely related to unemployment. The long-term Phillips curve, however, is different. Economists have noted that in the long run, there seems to be no correlation between inflation and unemployment.
What is the aim of Fiscal policy?
One of the major uses of government fiscal policy is to create stability in the economy. To curb inflation would be another use of fiscal policy.
If policy makers are worried about inflation what would be a correct fiscal policy change?
A fiscal policy solution to inflation would be to either increase taxes or decrease government spending.increase the tax rate
Which fiscal policy strategy would the federal government most likely use to stablize the economy?
The fiscal policy strategy that the Federal government would most likely use to stabilize the economy during times of inflation is to raise taxes. However, they could also decrease government spending.
Which action would be a change in the government's fiscal policy?
Which action would be a change in the government's fiscal policy
How can the federal government use fiscal policy to combat unemployment?
The government can cut taxes. This would put more money into the hands of theAmerican citizens, which would get the economy moving a little more and allow business owners to hire on more employees.
Where is fiscal policy used?
Fiscal policy is used by the government mainly in the following ways; by taxation and spending. This is how it is done. To increase GDP, the government increases its budget, spends say $45 billion into the economy which is an expansionary policy. Whereas, if the government takes out $45 billion, it would mean a decrease in jobs, increased unemployment, this is known as contractionary.
If inflation falls why would unemployment rise?
When economists look at inflation and unemployment in the short term, they see a rough inverse correlation between the two. When unemployment is high, inflation is low and when inflation is high, unemployment is low. This has presented a problem to regulators who want to limit both. This relationship between inflation and unemployment is the Phillips curve. The short term Phillips curve is a declining one. Fig 2.4.1-Short term Phillips curveThis is a rough estimation of a short-term Phillips curve. As you can see, inflation is inversely related to unemployment. The long-term Phillips curve, however, is different. Economists have noted that in the long run, there seems to be no correlation between inflation and unemployment.
What effect did ford’s economic policy have on the economy?
Inflation went down due to spending cuts, but unemployment remained high under Ford's economic policy.
Is unemployment insurance an example of economic policy?
No, because the economic policy is basiccly jobs and unemployment would be the oppisite of that. So yeah.
How are the inflation and unemployment related in short run?
In the short run, there is a negative correlation between the changes in wages (normally growth rate) and the rate of unemployment. Changes in wages imply changes of inflation. This relationship is known as Phillips' Curve, in honour of William Phillips, who discovered it in 1958.Thus, the bigger the rate of inflation, the lower the unemployment. This appealing consequence made politicians think that they could get the level of employment they want just by creating more inflation.Eventually this was not true, and studies after these years showed that this correlation fell apart, and there were combinations of high unemployment and inflation.Why was that? The answer is expectations. If individuals know that governments (or central banks) will follow a weak monetary policy (increasing the circulation of money in the economy and therefore generating inflation) they will expect the rate of inflation to be high. Trade unions will endeavour to get rises in wages, and this will impede companies to hire more workers. Thus if the monetary authority increase inflation now, it would not get reduction of unemployment.
Which 1976 candidate told Time he would fight unemployment and take your chances on inflation?
jimmy carter
If government drops one million dollars from the sky is it a monetary or fiscal policy?
Assuming the million dollars is money that was not already in circulation, this would be part of monetary policy. This is because it would be increasing the money supply. If, however, the money came from taxes and was a part of government spending, then it would be fiscal policy.
