The Hong Kong government has announced 120 billion Hong Kong dollars ($15.4 billion) worth of measures to support an economy that’s been dragged down by pro-democracy protests and the new coronavirus outbreak. That planned spending would result in “an all-time high” fiscal deficit of 139.1 billion Hong Kong dollars for the coming financial year…”. (source: CNBC. Hong Kong plans $15 billion spending to support its economy amid coronavirus outbreak.2020/02/26)

 

Analyze the impact of the budget deficit mentioned above on the market of loanable funds in Hong Kong. Use graph to illustrate your answer. (20 marks)

Answer rating: 100% (QA)

Analyzing the impact of a budget deficit on the market for loanable funds involves understanding how changes in government spending and fiscal policy ... View the full answer