Describe the situation of the Japanese economy in the 1990s. What should the Japanese government have done differently, according to critics, to improve the economy?
What will be an ideal response?
The nominal interest rate was essentially zero in Japan. Japan was in a liquidity trap, in which monetary policy alone became ineffective. Japan should have used more expansionary fiscal policy, along with expansionary monetary policy, to escape the trap.
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Consider a nation in which most workers are unionized. If all the nation's unions band together and succeed in boosting wages established by long-term labor contracts, then
A) there is a leftward shift in just LRAS. B) there is a leftward shift in both LRAS and SRAS. C) there is a rightward shift in just SRAS. D) there is a rightward movement along the SRAS curve.
The tax that generates the most revenue for state and local government is the
a. corporate income tax. b. individual income tax. c. property tax. d. sales tax.