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Unformatted text preview: 1 1 Macroeconomic Policy Issues and Controversies Active versus Passive Policy SR versus LR effects Discretion versus Rules Deficits and debt Evolution of Macro Current Controversy 2 Can the Government influence macro conditions? Should they? Short-Run Keynesian Yes Economy unstable Fiscal/ Monetary policy impact agg D Long-Run Classical Perhaps Not Economy self-adjusting if left alone Fiscal Policy crowding out no effect May be destabilizing in short-run pro-cyclical Monetary Policy only P May be destabilizing in SR - Pro cyclical Vertical Phillips curve Rational Expectations 3 In the News? 2 4 Course Issues LAST CLASS Monday 5/3 o Investment Game ends at market close on Friday 4/30 Extra Credit due, Inv game results FINAL EXAM How to study Review Guide, Essential Questions Chat Room, Study groups Q&A Course Evals / Surveys (3) FINAL EXAM CONFLICTS see me NOW Finalexams.rutgers.edu Extra Credit - ??!! 5 Discretion versus Rules (monetary policy) Position Depends on Views on: stability of economy self adjusting or unstable political interference - business cycle lags Lags and possible Pro cyclical policy Uncertainty...
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