It seems that it will be the government shifts. The next government with the Social Democrats in the lead wants to operate expansive fiscal policy. A journalist asks to social demokreterna this: Unemployment is falling next year and the country will be in a boom in 2015 according to NIER. Under your proposal, you will invest 2 billion more on schools, compared with the current government and 5 billion more on health care. Where will mean your fiscal policy in the short term and medium- long term? But the journalist received no direct answer to his question.
a. You were commissioned to analyze the situation and provide answers to the journalist. (Analyse by using your knowledge of economics.)
b. The Riksbank has taken note of your report and believe that your conclusions are correct, which means that the Riksbank must respond with monetary policy to achieve its goals. What the Riksbank will do? Explain using your knowledge of economics.