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Assume that for economy X the economic growth is very high and unemployment all time low. Inflation is beyond the targeted single digit level (is...
Assume that for economy X the economic growth is very high and unemployment all time low. Inflation is beyond the targeted single digit level (is beyond 9%).
(a). What kind of monetary policy would you advocate for the central bank to implement?
(b) Explain your answer in (a) above
(c) Give an example of a monetary policy instrument to be used in (a) above
(d) Use illustrations (IS-LM and AD-AS frameworks) to explain the transmission mechanisms and nexus
(e) Under which circumstances would you recommend a different type of monetary policy?
(f) How can you resolve the problem using a fiscal policy?
(f) Can the same problem be resolved using supply side policies? Which ones?
