Country current appropriate economic policies from a domestic and international perspective with justification
Country A. The government supports economic growth through the percent of Gross Domestic Product (GDP) as calculated by the deficit in fiscal policy. The government focus on domestic policies than the international policies on building the economic market making it hard to regulate currency floats and inflation levels. The government seems to run a deficit budget as it needs more than it has to attract external borrowing. Country B. The country got poor governance thus pulling the international perspective behind leaving the private sectors to empower economic growth as an independent body, therefore, only domestic policies are catered for in the country. In the case of political change, the country expects to be at a better place as its promising. Country C. The economy is gradually developing its economic structure majoring in interest rates, consumer prices which are domestically based, and foreign exchange which is an international strategy. The expansion in economic growth promises the country to have a safe economic market. The government supports the economic infrastructure to reach the market economy. Country D. The government monitors the exchange rates which embrace the international strategy as well as consumer prices and interest rates to empower entrepreneurs in the economy keeping the third of GDP for consumption.
Tools of country analysis applied to analyzed countries with explanations
Financial crisis. Country A faces the crisis as it experiences inflation and currency floats. The experience results in a rise in interest rates, consumer prices, and exchange rates. The entrepreneurs will find it hard to invest thus the country and the GDP negatively affected. Country B suffers the crises due to a lack of stable governance leading to unregulated domestic policies such as interest rates (Kabra, & Das, 2019). The country remains behind in utilizing its resources to increase its wealth and increase the living standards of its citizens creating employments and attracting foreign investment to grow their economy.
Currency crisis. Country B faces the crisis as there is no stable government to defend its currency from deteriorating. The currency expects to undergo sharp depreciation or devaluation in the foreign market.
Foreign debt. All the countries A, B, C, and D face the crises as they are not able to exploit their natural resources and finance their foreign debt rather are focusing on domestic growth and striving to reach the economic markets. The countries have potentials where if under good terms can borrow external debt, put to use their natural resources, and finance the debts without much strains except country B which lacks good governance and therefore the accountability of debt can not be assured but promises political stability.
Banking crisis. Country A falls a victim as there is inflation which results in a rise in interest rates which attracts many investors to deposit their money to banks and limits the borrowers from borrowing. The country also has no strong private investments to support economic growth and banking services and products. The banks, therefore, have no credit-liquidity balance and the government required to intervene in the interest rates. Country B though it has many private sectors face the crisis from government perspective of interest rate control, the government need to consider interest rates for them to balance the bank’s borrowing and lending thus avoid the inflations