Posted: March 6th, 2014

Gap, Fiscal policy, Monetary Policy

The current rate of unemployment is at 9.0%. Inflation is at a low rate of 2%. Firms are operating at only 70% of their capacity. The natural rate of unemployment is assumed to be 4%.- What gap is this economy facing?- What type of Fiscal Policy would you suggest in this case, What might diminish the effectiveness of this policy?- What type of Coordinated Monetary Policywould you suggest in this case, What might diminish the effectiveness of this policy?

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