Suppose an economy is experiencing a recessionary gap

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Reference no: EM13685034

Suppose an economy is experiencing a recessionary gap.

Explain the state of the economy (focus on employment/unemployment and inflation).

Utilizing the full repertoire known to you, devise an appropriate mixture of fiscal and monetary policies to reduce the gap. I want you to address the two facets of fiscal policy, and the four methods for impacting borrowing and the money supply in your proposal.

Explain the impact each of these would have on the components of PAE (C, I, G, and Net X -- ex. decreasing tax rates will increase C by raising disposable income, Investment by...)

Thoroughly explain the advantages and disadvantages of each of the proposals. (ex. time required, long-term ramifications, political complexities)

Reference no: EM13685034

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