suggest measures to control this stagnation
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(a) It reduces the real quantity of money, raises interest rates and brings a fall in investment expenditure,
(b) The rise in the price level reduces the real value of cash balances with the government and the private sector via the Pigou effect which reduces their consumption expenditure,
(c) The rise in prices of domestic goods makes exports dearer for foreigners and makes foreign goods relatively more attractive to domestic consumers, thereby adversely affecting domestic output and employment.
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