To develop nuclear weapons and increase the military power, Country Z has raised the proportion of government spending on national defence from 10% to 20%. All males aged from 20 – 25 are also required to join the military force for 2 years.
In response to the increasing military threat from Country Z, the United Nations has passed a bill to embargo most of the goods exporting from Country Z.
Analyse the effects of the above situation on Country Z’s:
● general living standard,
● aggregate output in the short run. (6 marks)