Short Run) Suppose the Travis virus has spread across the globe including to the Concerto economy. Use a macroeconomic model and its relevant diagrams that explain short-run economic fluctuation to answer the following questions: a. What happens to Concerto economy when the outbreak of the Travis virus dramatically increased the uncertainty to firms and businesses. What is the policy option to solve this situation if both government debt and its budget deficit are already at alarming level? (Hints: Gradually explain the effect of uncertainty to Concerto economy and then the effect of the chosen policy to the economy in the next period). b. During pandemic, The Concerto government has spent a tremendous amount of money, mostly from debt, to support the economy. What happen to domestic investment if after pandemic the Concerto government start reducing its budget deficit to avoid the unsustainable debt burden? c. Is there any factor that make your answer in point b will be invalid? Explain. (Hints: Discuss the effect of budget deficit reduction on both goods market and money market)
(Short Run)
Suppose the Travis virus has spread across the globe including to the Concerto economy. Use a
a. What happens to Concerto economy when the outbreak of the Travis virus dramatically increased the uncertainty to firms and businesses. What is the policy option to solve this situation if both government debt and its budget deficit are already at alarming level? (Hints: Gradually explain the effect of uncertainty to Concerto economy and then the effect of the chosen policy to the economy in the next period).
b. During pandemic, The Concerto government has spent a tremendous amount of money, mostly from debt, to support the economy. What happen to domestic investment if after pandemic the Concerto government start reducing its budget deficit to avoid the unsustainable debt burden?
c. Is there any factor that make your answer in point b will be invalid? Explain. (Hints: Discuss the effect of budget deficit reduction on both goods market and
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