Government of a country named San Lorenzo follows a Mixed Economy. Due to economic disturbance there is high inflation in the country along with unemployment. People of that country are dying of hunger and starvation that is leading to riots and civil disobedience against the governing bodies. Consequently, the Government has started printing more currency.
Now, as an economist of San Larenzo, determine the root causes of economic disturbance and suggest suitable policy measures.
Note : San Larenzo is a closed economy. Closed economy is self-sufficient, with no imports or exports from international trade.
Instructions.
Suggest policies and interpret what might be the cause of such economic problems.
Make use of the comment section to state opinions in one another’s solutions.
No language barrier. (Preferably write in English).
The discussion will be continued till 19th of September 12pm. (You can carry on with the discussion, but marks will not be provided)
Within 2-3 days winners will be declared on the website.
On 20th September, 12 pm Topic 2 will be posted for the discussion.
All the best future Economists!
Good job diti. But why to depend on international market, let's think of some other solutions except opening the economy.
San Lorenzo is a municipality located at Puerto Rico, USA. as per the data collected from the following source: San Lorenzo Municipio, PR | Data USA, The largest industries in San Lorenzo Municipio, are Retail Trade , Manufacturing , and Educational Services. the highest paying industries are Professional, Scientific, & Technical Services , Public Administration , and Finance & Insurance. however, in this case, we can consider it as a country.
possible causes of the economic disturbance:
closed economy of San Lorenzo
increased production in the largest and highest paying industries, leading to inflation
solutions
promotion of foreign investment and facilitating international trade in the largest and highest paying industries, which will result in growth of technical know-how.
government can disinvest in these sectors, and focus on eradicating hunger and starvation deaths by increasing their budgetary allocations towards the health, and agriculture sector.
with the rise in income levels, government can invest on securities, so as to maintain their cash reserves