Macroeconomics (7th Edition)
Macroeconomics (7th Edition)
7th Edition
ISBN: 9780134738314
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 18, Problem 18.3.4PA
To determine

The relevance of savings by people outside of the US and impact of domestic investment.

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Briefly analyse the various policy measures that a government might have to undertake to deal with and finance a growing fiscal deficit
OMAN'S ECONOMIC UPDATE Excerpt from The World Bank (October 2020) Similar to most economies all over the world, "the economy of Oman contracted sharply in 2020 amid the weakness of oil prices and the disruptions from COVID-19. Fiscal and external deficits will remain under immense strain due to prolonged low oil and gas prices, elevating public and external debt. Key risks to the outlook are prolonged low oil prices, which will induce high external borrowing needs, and lack of impetus for private sector job creation that does not depend on government spending. The drop in oil prices and COVID-19 are placing unprecedented strain on Oman's economy. While no official data are available yet on the economy in 2020, preliminary data issued by the authorities indicate that Oman's nominal GDP has contracted by 3.9% in Q1/2020 (y/y); non-oil activities contracted by over 6%. Inflation has reached negative territory with -0.4% (y/y) in Q2/2020 reflecting weak domestic demand. The sharp drop in…
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