Respond to Luis Rodriguez I recommend Mrs. Ibrahim's proposal to lower interest rates as the more effective approach for fostering economic growth in Sudan. Sustainable Growth - Lowering interest rates encourages investment in productive capacity, which can lead to long-term economic growth rather than a temporary boost from cash transfers. Job Creation - This approach can create more stable employment opportunities by promoting business expansion through lower borrowing costs. Addressing Structural Issues - Lower interest rates can help address underlying structural issues in the economy, such as low production levels, by incentivizing businesses to invest in technology and infrastructure. Inflation Control - While there is a risk of inflation if appropriately managed, focusing on productive investments can help mitigate this risk compared to the potential inflationary effects of direct cash transfers. In conclusion, while both proposals have merit, Mrs. Ibrahim's approach of lowering interest rates is more likely to lead to sustainable economic expansion and a healthier labor market in the long run.
Respond to Luis Rodriguez I recommend Mrs. Ibrahim's proposal to lower interest rates as the more effective approach for fostering economic growth in Sudan. Sustainable Growth - Lowering interest rates encourages investment in productive capacity, which can lead to long-term economic growth rather than a temporary boost from cash transfers. Job Creation - This approach can create more stable employment opportunities by promoting business expansion through lower borrowing costs. Addressing Structural Issues - Lower interest rates can help address underlying structural issues in the economy, such as low production levels, by incentivizing businesses to invest in technology and infrastructure. Inflation Control - While there is a risk of inflation if appropriately managed, focusing on productive investments can help mitigate this risk compared to the potential inflationary effects of direct cash transfers. In conclusion, while both proposals have merit, Mrs. Ibrahim's approach of lowering interest rates is more likely to lead to sustainable economic expansion and a healthier labor market in the long run.
Chapter17: Development Economics
Section: Chapter Questions
Problem 4E
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Question
Respond to Luis Rodriguez
I recommend Mrs. Ibrahim's proposal to lower interest rates as the more effective approach for fostering economic growth in Sudan.
- Sustainable Growth - Lowering interest rates encourages investment in productive capacity, which can lead to long-term economic growth rather than a temporary boost from cash transfers.
- Job Creation - This approach can create more stable employment opportunities by promoting business expansion through lower borrowing costs.
- Addressing Structural Issues - Lower interest rates can help address underlying structural issues in the economy, such as low production levels, by incentivizing businesses to invest in technology and infrastructure.
- Inflation Control - While there is a risk of inflation if appropriately managed, focusing on productive investments can help mitigate this risk compared to the potential inflationary effects of direct cash transfers.
In conclusion, while both proposals have merit, Mrs. Ibrahim's approach of lowering interest rates is more likely to lead to sustainable economic expansion and a healthier labor market in the long run.
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