Question
Read the opinion article: Global liquidity trap requires a big fiscal response (https://drive.google.com/file/d/1cJ0zXrizuZK8m5FYWhfddT9J5BmJLD2d/view?usp=sharing). The last paragraph says: This is a once in a lifetime crisis.
Read the opinion article: "Global liquidity trap requires a big fiscal response" (https://drive.google.com/file/d/1cJ0zXrizuZK8m5FYWhfddT9J5BmJLD2d/view?usp=sharing). The last paragraph says:
This is a once in a lifetime crisis. Policymakers have responded strongly, averting an even deeper recession. Monetary policy has and will remain central to this effort, but with the world in a global liquidity trap it is time for a global synchronised fiscal push to lift up prospects for all.
(a) Use IS/LM graphs to illustrate and explain what she means when she says "...world in a global liquidity trap..."
(b) Use IS/LM graphs to illustrate and explain what she means when she calls for "...a global synchronised fiscal push to lift up prospects for all."
(c) Why does she call for fiscal stimulus as opposed to expanding monetary stimulus?
(d) Do you think the writer in "What a Liquidity Trap Is and Why We're Looking at One" fully shares her (the writer in "Global liquidity trap requires a big fiscal response") view on monetary policy? Why or why not?
(e) Why does the writer think using Keynesian (and monetarist) tools of fiscal and monetary policies are not enough to adequately revive the Indian Economy? What does the writer suggest?
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