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Hi, could you show the exact answer to question and explanation. (References needed) This question about Money, rates and inflation, Fiscal policy (a)The impact of
Hi, could you show the exact answer to question and explanation. (References needed) This question about Money, rates and inflation, Fiscal policy
(a)The impact of COVID-19 threw the economy of Symposia into recession. The finance ministry has advised the government to engage in a borrowing spree to kickstart the economy. The finance ministry has advised the government to engage in a borrowing spree to kickstart the slowing economy. It suggests that this borrowing will increase the level of government debt from $10 billion to $14 billion, but that given interest rates are low, that this is a good time to update both the weapons held by the military and to upgrade the fleet of government cars while simultaneously boosting the economy, not just immediately but also into the future. The President of Symposia has asked you, as her chief economic advisor, for your views. In particular, she wishes to know the following:
(i)Would spending this money on weapons and cars boost the economy immediately and into the future? Your advise on this is ____________________ (provide your answer and justification on both the immediate and future impact. Feel free to use external resources to assist you in your answer if you prefer).
(ii)She has also heard that rising debt is bad for the economy, so this initial boost in government expenditure will eventually lead to an even worse economic outlook. She wants to know your opinion on this. Your advise is ____________________ (provide your answer and justification. Feel free to use external resources to assist you in your answer if you prefer).
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