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Questions a, b, and c must be at least one paragraph each
A.) Assume the following information is relevant for an advanced economy over a three-year period. Describe in detail the macroeconomic situation faced by this society. Is cost-push inflation evident? What corrective policies would you recommend and why?
Year
Increase in Price Index
Increase in Labor Productivity
Industrial Production
Average Unemployment Rate
Hourly Wage
1
167
4%
4.5%
$6.00
2
174
3%
2%
5.2%
$6.50
3
181
2.5%
1.5%
5.8%
$7.10
B.) What contributed to stagflation's demise between 1982 and 1989? How did these events affect aggregate supply and the Phillips Curve?
C.) Compare and contrast the three budget philosophies: annually balanced budget, cyclically balanced budget, and functional finance.
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