You have learned a general principle about macroeconomics shocks as "Finance temporary output shocks (by running current account deficits or surpluses without much change in spending) and adjust to permanent output shocks (by changing spending, without much change in the current account).

Assume you are working in your country's treasury. Explain to your government's advisory body whether the following shocks could be considered as permanent shock or temporary shock. Explain the potential impact of the policies on consumption, savings and current account. List and discuss a policy that could be used to mitigate (reduce) the effect on the nation's performance (income, consumption, savings and current account).

1. widespread flood that destroyed businesses and homes
2. a change in technology that reduce drastically the market for a major export good or service.