Please enable JavaScript.

Coggle requires JavaScript to display documents.

Policies for Inflation - Coggle Diagram

- - - - Expectations of households and firms
      - Time lags
      - Incentive to work (Less incentive to work due to taxes, LRAS falls, hard to manage in the future)
      - May affect RNY and unemployment
  - - - Interest elasticity for demand of I (Expectation), if confident, tends to be inelastic, unaffected by IR
      - Command and Control Problems (If country open to capital flows, more hot money inflow which counters decrease in AD)
      - Availability of alt funds (If FDI is dominant, no change)
      - Time Lags
      - Uncertainty and Unpredictability (Changes in IR again, long term investments may reduce, long run may be affected)
      - May affect RNY and UE
  - - - Time Lag
      - Economic conditions abroad (If other countries have economic booms, appreciation not as effective)
      - Availability of foreign exchange reserves (If govt does not have enough foreign currency, not as effective)
      - Only external demand affected (If affected by others, not effective)