Question

“Egyptian government program to boost consumer spending goes live today.” Enterprise, 26 Jul. 2020.

Questions on Article:

1.

a) What’s the article talking about? Briefly state the main points in the article.

b) How can this program affect our circular flow diagram? How can this benefit the two players in the economy? Explain.

c) What is the effect of this program on GDP? Explain.

d) In your opinion, why do you think the government initiated this program during the pandemic?

Answer 1

a. The article talks about the measures that Egyptian government is taking to boost the level of economic activity in the nation. The program aims at increasing the level of consumption expenditure in the economy which will increase aggregate demand in the economy and help in the elimination of recessionary gap in the economy.

b. The program will increase the expenditure made by the consumers on purchase of goods and services in circular flow model. This will increase demand for goods and also induce firms or producers to increase their level of production in the economy. This will increase overall flow of income in the circular flow model. Thus, it benefits both the firms and consumers as players in the circular flow model of the economy.

c. As flow of income in the circular flow model of the economy increases, the GDp in the economy will increase.

d. During the time of pandemic, imposition of lockdown to control the spread of the disease led to recessionary conditions in the economy which reduced the level of Real GDP in the economy. A reduction in the level of real GDP in the economy needed government intervention to eliminate recessionary gap. Thus, government introduced various stimulatory measures to increase the level of economic activity in the nation.