The economy of the developing country Tugije has been hit hard by the global pandemic. The local currency, the tubra, has fallen from 10 to 20 tubra per dollar within a year. Tugije has $17\") billion in foreign debt, which must be renanced every year. Since 2010, Tugije has hardly invested in technology and education. As a result, labor productivity is low, and the value of imports is greater than exports. Raw materials for production are imported, like also energy. Much is paid in dollars or euros, but little is earned in foreign currency. Tugije is dependent on money from abroad. But investments have come to a standstill due to a lack of confidence in Tugije's economy. The Tugije government plans to tackle skyrocketing inflation with a series of interest rate cuts. To counter the negative effects of ination, the government has announced a credit guarantee plan. The credit guarantee plan means that the government will compensate savers for losses if the tubra falls against the dollar more than the interest paid by banks. The measure is intended to counter the extreme dollarization, which threatens to plunge Tugije's economy into a downward spiral of devaluation and hyperination. But tricks like the credit guarantee plan increase the cost of so-called credit default swaps (CDS), which insure investors against default. The CD8 from Tugije are now among the most expensive in the world. This suggests that investors expect Tugije to default. 6a. Explain why the plans of the Tugije government causes a downward spiral of devaluation and hyperination (2 points). b. 1What actions should the government take to get the economy up and running again? (2 points)