SHORT ESSAY (Please answer prompts in roughly 150-300 words) Here is some data on the Hypothetical Country of Sternistan GDP 100 Billion Sternies (Local Currency Unit) Real economic growth (GDP) 6% Unemployment Rate: 4% Current Account Balance -9% of GDP Sternistation Inflation Rate 10% (US Inflation Rate) 3% Fixed exchange rate to the U.S. Dollar for 1 Local Currency Units per Dollar Local Currency Nominal Interest Rate on Government 15% Debt Domestic Prime Bank Lending Rate (local 15% currency) U.S. prime lending rate (in USD) 4% Government Debt to GDP 100% Corporate Debt to GDP 200% Government Spending (Direct and 15 Billion Transfer Payments) Taxes Collected 15 Billion Percentage of Corporate and Government Debt Denominated in USD 50% each Dollars Exports as a percentage of GDP 50% Imports as a percentage of GDP 57% Two questions for you to answer briefly: (1) Looking at the data above, what would the pros and cons for local company in this country in borrowing from a US bank in US dollars? (In your answer, what in the data above suggests the above economy is attractive. What data would be of concern?) (2) An investor interested in buying government bonds is curious about the fiscal situation and risks for a financial crisis. What is your analysis of the state of the economy and in particular the government fiscal situation looking at debt, deficits and other economic/financial conditions