Question
Question 1: In a modern economy, the four main factors driving economic growth are consumer spending, government spending, fixed investment, and net exports. Explain how
Question 1: In a modern economy, the four main factors driving economic growth are consumer spending, government spending, fixed investment, and net exports. Explain how an easing monetary policy affects each of these factors (except government spending). Also, will the overall effect of an easing monetary policy be the same across different countries (e.g., China and the US)? If not, why? A minimum 300 words are required.
Question 2: Economic theories tell us that a rapid increase in money supply would normally lead to an inflation, which was also one of the main critics/concerns when the Fed (in the US) started quantitative easing (QE) following the GFC in 2008-09. Explain why in recent years deflation, instead of inflation, has been the main concern across many advanced economies, despite many countries increased money supply at levels not seen before.
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