Answer to Question #248326 in Macroeconomics for shon

Question

1. The Bahamas has experienced several adverse supply shocks in the past that has challenged the stability of the economy, however, much of this downturn was mitigated by government intervention. This approach runs contrary to the classical remedy. Evaluate the government’s efforts to reduce the impact of these adverse shocks (use specific examples). 

 

Answer 1

To mitigate the adverse effects supply shocks the Bahamas Government has implemented various intervention.

1. The government devaluated its currency to boost spending on exports.
2. Stabilising inflation to enhance suppliers production.