You are graduate employee at an International economics think tank called the "Melba" institute and you have been asked to provide some comparative research relating to the findings presented in the article above.

Specifically, you have been asked to compare the impact of Covid on the Macroeconomy on both a large economy and a smaller developing economy (this country is not limited to those listed in the article but would need to be a smaller economy that trades with one of the large economies such as the US or China).

You are also asked to examine the macroeconomic interdependencies between the large, developed economy and their smaller trading partner. From your findings what can you deduce about inequality in economic recovery as we move to the second part of 2021

Concepts listed below can be used for comparison,

Current economic context of both countries: What has been GDP growth / unemployment / inflation in recent quarters? What are the major policy concerns for both economies.

Balance of payments

What does the balance of payments indicate about the economies net wealth - what have been recent changes or trends in the balance of payments in the respective economies and what are the key drivers of that change.

What does this imply about the countries approach to trading consumption across time - historically have they been net lenders / net borrowers

Has COVID resulted in any major changes in Balance of Trade / the CA / the financial account - (magnitude of change in both economies)

What can you deduce about both economies from the balance of payments data

Exchange Rate determination - identify and contextualise what drives the value of the country's currency

Have there been recent changes in the value of the domestic currency and what might be driving this - link to the theories of exchange rate determination eg inflation, interest rates etc ...Big Mac index PPP

Identify any major shifts in fiscal or monetary policy - how might this impact on the value of the currency

What is the role of the respective central banks? Is the exchange rate managed? Is there discussions around a Central Bank Digital currency? How might this impact on the exchange rate

Are there concerns around capital flows?

If the exchange rate is flexible how volatile have fluctuations been

How sensitive is the economy to changes in the exchange rate?

How might a change in the exchange rate impact of the trade balance.

How might a chance in the RER come about (change in e or relative prices)

Estimate which quadrant of the SWAN diagram your country of choice may be operating in?

What might that predict about the role for policymakers - what should be the policy focus - internal and external balance

IS LM BP model applications

Impact of Expansionary fiscal or monetary policy

Changes in relative interest rates

The effect of Covid - (external shock and the adjustment mechanisms)

Map the Macroeconomic interdependencies and spillover effects of policy changes in the large economy

How exposed are the economies to to external shocks

How exposed are the economies to internal shocks

Is there fear of currency crisis - credibility concerns relating to the domestic currency.

Question 1 What is the Keynesian prescription for curing recession? Keynesians prescribe increasing aggregate demand through government spending O Keynesians prescribe increasing aggregate demand through fiscal restraint O Keynesians prescribe decreasing aggregate demand through government spending Keynesians prescribe decreasing aggregate demand through fiscal restraint OQuestion 4 The theory that wants the state to keep a watchful eye on markets is: O Neoclassical O Keynesian O Marxism O Socialism Question 5 Which theories advocate capitalism as the preferred economic arrangement? O Neoclassical O Keynesian O Neoclassical and Keynesian O Marxism and Neoclassical Question 6 The economic philosophy that links the business cycle of capitalism with class structure is: O Neoclassical O Keynesian O Marxism O Marxism and KeynesianQuestion 47 1 pts Which of the following is most closely related to the following formula: (M/P) = 1 (i, Y) ? O. Keynesian economics O Supply-Side economics O Rational Expectations O Classical economics O MonetarismRecently a new law known as the Tax Cut and Jobs Act of 2017 (or commonly called the Trump Tax Cut) was passed during December 2017. It cut the U.S. corporate and small business tax rate on profits from 35 percent to 21 percent. Question: What does the Keynesian formula say should happen to the U.S. Economy? Multiple Choice O The Keynesian formula would predict an increase in the U.S. economy. O The Keynesian formula would predict a decrease in the U.S. economy. O The Keynesian formula would say that it will have no effect. O Keynes said that raising corporate taxes to 50 percent would grow the economy