Question
1a. Both fiscal and monetary policies influence exchange rates and the current account balance. Deeply explain how monetary and fiscal policies are used to correct
1a. Both fiscal and monetary policies influence exchange rates and the current account balance. Deeply explain how monetary and fiscal policies are used to correct imbalances in the balance of payments, i.e. in case the country is experiencing a deficit in its balance of payments, how monetary and fiscal policies restore equilibrium in the balance of payments?
1b. In recent years, Bahrain has been borrowing abroad. According to the International Monetary Bahrain's official debt-to-GDP ratio is 123%. How do you explain the impact of such high debt-GDP ratio on the value of the Dinar, capital flows, interest rates, and economic growth?
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