Question

It has suffered the recurring economic problems of inflation, external debt, capital flight, and budget deficits. In an election in 2015, Mauricio Macri was elated with a mandate to reverse the government-driven economic policies of his predecessors. What were the recurring economic problems faced by the country?

1) Inflation, external debt, capital flight, and budget deficits
2) Unemployment, poverty, corruption, and political instability
3) Trade deficits, income inequality, environmental degradation, and population growth
4) Fiscal deficits, public debt, trade imbalances, and currency devaluation

Answer 1

The country faced issues of inflation, external debt, capital flight, and budget deficits before Mauricio Macri's election in 2015. These economic challenges impair financial stability and may necessitate a combination of policy remedies like expansionary fiscal policy and trade balance improvement.

Step-by-step explanation:

The recurring economic problems faced by the country prior to Mauricio Macri's election in 2015 are inflation, external debt, capital flight, and budget deficits. These issues are significant as they represent challenges that can undermine economic stability and growth. Inflation erodes the purchasing power of money, external debt may lead to dependency on foreign creditors, capital flight can deplete a country's financial resources, and budget deficits indicate that a government is spending more than it earns, which can be unsustainable in the long term.

For high-income countries such as the United States, Western Europe, and Japan, addressing these issues often involves implementing expansionary fiscal policies, including running budget deficits in an attempt to stimulate the economy. However, this strategy can be controversial and may require a balancing act between government spending and taxation to avoid long-term detriments to the economy. Similarly, economies with large trade deficits may experience a loss in investor confidence, leading to a recession and a decline in GDP as capital flows out of the country.