Respond To External Shocks Flashcards
1
Q
Example of external shocks (4)
A
COVID
Financial crisis in 2008
Wars = Ukraine
Strikes
2
Q
Fiscal policy goods and bad (2)
A
Increase gov spending = furlough = 78bn
Opp costs and worse fiscal deficit
3
Q
Monetary policy + bad + ex (3)
A
Reduce IR to increase borrowing
BUT … WPIDEC and cost push inflation
Was 0.1% during covid to encourage spending = but liquidity trap potential
4
Q
Exchange rate
A
Increase IR = hot money flows
5
Q
Supply side policy
A
Increase in education and healthcare = vaccine
