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Economics of Countries

A. Country X have the disaster in the country destroying half of manufacturing and territory but this country does the finance for many countries in this world, country X is a world leading Economy with Trillion.
- How the government improve the country and what will happen (affect) with the country's GDP in a few year?

B. Country Z has the largest economy which produce low price and low quality and what if country Z become world trade currency
3% GDP
- What will happen with the GDP if they become world trade currency?
- How can another countries acquire this currency?
- If not the world currency but gold micro-gram the medium international trade?

C. What is Impact of GDP, inflation, unemployment and recession, can the government do anything to help to restore economic growth?

D. Two countries, one is yours other one is socialism. Which system will you pick and why? How the two economics will perform and develop? What is the absolute power in terms of economic management?

Solution Preview

A.
Since the disaster has destroyed half of the manufacturing and territory, the government will improve the economy using fiscal and monetary policy measures. The fiscal measures will be that the government will begin infrastructure building projects that will increase government spending in the economy. It will use stimulus measures. Further, the government will take steps to maintain liquidity in the market and ensure that the financial institutions function properly. The central bank will lower the interest rates and provide loans to banks for asset backed commercial paper. If there is troubled mortgage related assets with the banks, the government will purchase these assets. The government will provide direct assistance to the states that have been hit by the disaster so that they can finance health expenditures. The government will provide direct assistance to the manufacturing industry that has been hit by disaster. This assistance will help the manufacturing industry survive and will prevent employee layoff. The government will also use the central bank of the country to keep the interest rates low, purchase debt and mortgage backed securities from banks, and make emergency loans to address financial crisis. The Central Bank will increase the liquidity in the market so that loans are available at reasonable prices to businesses for rebuilding the ...

Solution Summary

The response provides you a structured explanation of how the government increases liquidity in the market, decreases iinterest rates, and ensures that the financial markets function properly. It also gives you the relevant references.

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