Question

Suppose that the governor of Georgia wishes to pass fiscal policies that would have an immediate impact on the state’s economy, and hence improve his chances of reelection. What type of policies would the governor be inclined to support and why? What happens if the government wants to lower the unemployment rate in our economy, like we are experiencing right now, how will this affect the inflation rate as well? Can the government influence both of the variables (inflation/unemployment rate) at the same time in a positive direction? What are the implications of stabilizing just one of the variables?

Answer 1