Question
You are in charge of the economy of a small country undergoing an economic downturn. Your only choices to impact the economy are to change
You are in charge of the economy of a small country undergoing an economic downturn. Your only choices to impact the economy are to change the tax rate or change the money supply (in this you can print more money, change interest rates, change the reserve requirement, or purchase or sell bonds). In what way would you change the tax rate (if any) and in what way would you change the money supply (if any)? Please explain what you intend to do or not to do and why if the economic downturn is mild, if the economic downturn is moderate, and if the economic downturn is severe? Please make sure your answers are consistent with current economic theory.
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