question archive Briefly, using words, a formula or a diagram explain: (i) Can an economy maintain high output growth, low unemployment, and low inflation at the same time? Explain why/why not by referring to equations or diagrams
Briefly, using words, a formula or a diagram explain: (i) Can an economy maintain high output growth, low unemployment, and low inflation at the same time? Explain why/why not by referring to equations or diagrams
Subject:EconomicsPrice: Bought3
Briefly, using words, a formula or a diagram explain:
(i) Can an economy maintain high output growth, low unemployment, and low
inflation at the same time? Explain why/why not by referring to equations or
diagrams.
(ii) Most governments around the world are trying to respond to the Covid-19 crisis
by increasing public spending. As reported by the Guardian on April 9th "The
sudden closure of businesses and the furloughing of workers has resulted in
the drying up of tax revenues, forcing the Treasury to call on its overdraft facility
[at the Central Bank] to supplement the money it raises from the sale of
government bonds."
BEE2039R Turn over
6
a) What are the dangers of the sudden accumulation of so much public debt,
especially in terms of output, capital accumulation and investment?
b) Considering your answer to a) above, is this policy worthwhile? That is,
shouldn't the government instead rely on automatic stabilizers?
c) Will the situation described above increase the country's debt to GDP ratio?
What are the implications of that?
