economy was in perfect shape’in Year 1

Essay 2 Maximum Word Count 2000 words Year QYCIG Z Transfers 0% INF% Budget 1 100 100 60 20 20 30 30 40 5.0 2 0 2 103 106 62 22 22 31 31 40 4.0 -10 3 106 109 65 18 32 28 34 40 4.0 8 -18 4 109 104 16 34 28 34 40 6.0 11 -26 The economy was in perfect shape’in Year 1 as far as the govemment was concemed. There was low unemployment, low inflation, a good mix of consumption, investment and govemment expenditure, balanced trade and a balanced budget. However, the following three years were not so good. Using the above data, hypothesise what fiscal and monetary policies were enacted each year. If you were to assume control of the economy in Year 4, what policies would you advocate if your goals were to have low inflation, low unemployment and a balanced budget? (Total 40 marks)