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Small Kevin Neary

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The economy is in a deep recession and there are two different opinions that the Central Bank chairman must choose between: one advisor tells him that there is no need to use monetary policy to correct the recession because in the long run the economy always returns to potential GDP while the other advises him to use monetary policy immediately. What will the chairman most likely do?

Answer

Small Tutor Amanda Afi

It takes a very long time for the economy to self correct and in that time the ef...