What are the differences between monetary policies

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Reference no: EM13150349

The economic outlook of Nonsensestein Republic is not looking good. During the electioneering campaigns, the newly elected Prime Minister, Dr. No-nonsense promised to improve the economy. Her new executive government is proposing two policies: either increase government spending or decrease taxes. On the other hand, Central Bank of Nonsensestein Republic Governor, Prof. Know-it-all, is proposing two policy alternatives: encourage savings or stimulate private investment. The Prime Minister was informed about ECON 100 at the University of Badu, because of this; she employs you as her Chief Economic Adviser. Congratulations! Your first assignment is to recommend an economic recovery policy from the policy alternatives. - Use the appropriate multiplier formula to determine the impact of the following on Nonsensestein Republic’s GDP: a) an increase in government spending by $500 million (MPC = 0.8) b) an increase in investment by $550 million (MPC = 0.65) c) a decrease in taxes by $600 million (MPC = 0.75) d) an increase in household spending by $700 million (MPC = 0.7) - As an Economic Adviser, which of the policies will you recommend? - Explain your policy choice in detail (This is an open ended question) - Choose the best policy combination (You cannot choose more than two policies) - Explain your policy combination in details (This is an open ended question) - Which of the policies is/are a monetary? - Which of the policies is/are fiscal? - What are the differences between monetary policies and fiscal policies?

Reference no: EM13150349

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