Difference among inflationary gap also deflationary gap

Reference no: EM1325551

Inflation, deflation and discretionary fiscal policy

Questions:

1. Explain the various types of inflation and its consequences. Suppose you borrow $1000 from a bank at 5% interest for one year and the inflation rate that year is 10%. Was this loan advantageous to you or to the bank?

2. Explain two limitations of the discretionary fiscal policy.

3. Describe the difference between inflationary gap and deflationary gap.

Reference no: EM1325551

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