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Unformatted text preview: up fast but difficult to go down. Price adjustments are not that easy due to long term wage agreements and long term supplier contracts. Monetary Policy The best monetary policy is NO monetary policy, especially stimulative. Creating demand will only cause inflation as the AS curve is vertical at potential. Leave the economy alone to adjust. Simulative Weak fiscal policy stabilization should be used tool compared to get out of a to fiscal policy recession; otherwise the economy will be stuck there due to sticky prices and wages. Investment Curve AS curve Unemployment Business Cycles Elastic/flat sensitive to interest rate changes, therefore any change in govt. borrowing for stimulative purposes will only cause a crowding out affect. Savings are determined by interest rates Vertical...
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- Spring '14