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Answer to Question #61785 in Macroeconomics for Jessica

Question #61785
Assume that a country has a growing budget deficit, carries a very large debt, is in a period of high unemployment with interest rates almost at zero, and annual inflation and GDP growth of about 2%.

What is the first action you would take as the president? Why?
Expert's answer
Since inflation is about zero, it sounds reasonable to decline the interest rates in the country in order to stimulate private spending and growth of a national economy. Commercial banks will lend money from a central bank, and then borrow it to businesses. It is going to be the main precondition of the economic growth.

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