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Answer to Question #110426 in Macroeconomics for Sweta

Question #110426
What is the 'divine coincidence' and why is it difficult to implement?
1
Expert's answer
2020-04-20T18:48:04-0400

Divine coincedence is a situation where stabilizing inflation is the same as stabilizing output.Divine coincedence holds when inflation rate is stabilized at exactly zero.

It is difficult to implement because of restricive assumptions required for divine coincedence to hold an example is real wage rigidities.


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