Economy experienced inflation or deflation

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Reference no: EM139281

Q1. a) Has the U.S. economy experienced inflation or deflation during recent recessions? Elucidate.

b) Can the inflation and unemployment trends during the Great Depression be elucidated by movement along a short-run Phillips curve?

c) Can the inflation and unemployment trends during 2008 be elucidated by a movement along a short-run Phillips curve?

Q2. Consider an AD overage of $200 billion, creating an inflationary/expansionary gap. Assume the MPC is .8

(a) Explain how could the government close this gap with tax policy (be specific about size and direction.)

(b) Explain how could the government close this gap with changes in expenditures (be specific about size and direction).

Reference no: EM139281

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