Macroeconomic position of Iran

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Essay question: “Choose any one country, assess its current macroeconomic position and discuss what policy options might be adopted (or have been adopted) by the monetary and fiscal authorities in the past year. What should the monetary and fiscal authorities be doing over the next year or so?” The country of choice is Iran. Detail required for writing: The central focus should be on GDP and its recent history. Is GDP below trend, is there a significant GDP gap? [For major countries, estimates of the GDP gap are available from the IMF, but for others you would have to compare actual GDP with its trend.] Is it positive or negative? If negative, why is demand weak…..is it C, I, G or net trade? Look for other indicators of slack or overheating, what is happening, for example, to inflation and unemployment? If inflation is high the economy may be overheating, but if unemployment is high and rising then the economy may need some stimulus. What is the state of the balance of payments? Does the economy need some stimulus or some slowing down? In most countries the dominant issue has been the recent global crisis. This has cut demand and led to output falls and higher unemployment. So a sensible focus would be: how has the crisis affected the country in question and what have the authorities done to try to mitigate the effects? What else should now be done? What have monetary and fiscal policy makers been doing recently? Have there been announcements of tax or spending increases or decreases by the government? Have official interest rates been rising or falling? On the basis of your analysis what would you recommend that policy makers should do next? The answer may be “nothing” but that would mean that you think things are as good as they can be.