Combination of monetary and fiscal policy

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Q1. "Soft Selling" and Adverse Selection soft selling occurs when a buyer is skeptical of the quality or usefulness of a product or service. For example, suppose you're trying to sell a company a new accounting system that will reduce costs by 10%. Instead of asking for a price, you offer to give them the product in exchange for 50% of their cost savings. Describe the information symmetry, the adverse selection problem, and why soft selling is a successful signal.

Q2. A small open economy with a floating exchange rate is in recession with balanced trade. If policymakers want to reach full employment while maintaining balanced trade, what combination of monetary and fiscal policy should they use?

Reference no: EM136999

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