Since 2014, the Brazilian economy has faced major dilemmas in maintaining sustained growth and development. However, mistaken economic policies led the country into a deep recession, now aggravated by the Covid-19 pandemic, which presents major challenges to the economic team of the current government. In a quick analysis, the current scenario shows: a. Persistent inflation remaining well above the inflation target; B. Government completely rigid when it comes to fiscal policy; w. Great dependence on the external sector, which signals prospects of a new crisis, which could reduce the flow of foreign capital towards the country. Given this scenario, and based on the IS-LM Model. 

What policies (monetary and/or fiscal) could be used to resume growth in the Brazilian economy? Justify the movements in detail so that this can happen.

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In order to resume growth in the Brazilian economy a combination of both monetary and fiscal policie... View the full answer