5 The unit's synthesis (memorise)

The cycle is the disease; inflation its fever; monetary and fiscal policy the two hands of thephysician — one on money and credit (the central bank's, constrained by the peg), one on tax and spending (the treasury's, constrained by the deficit and implementation) — and the small open economy's chronic condition: the most important macro decisions are made in Delhi's boardrooms and the Gulf's construction sites, which is why Nepal's policies are mostly buffers (reserves, transfers, discipline) around an imported tide.