ECONOMY OF BRAZILBrazil's economy is mainly supported by well-developed agricultural, mining, manufacturing and service sectors. Brazil's economy overshadows that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has shown steady improvement in macroeconomic factors, increased foreign reserves and reduced its debt profile by shifting the debt burden to domestically held instruments. After strong growth in 2007 and 2008, Brazil was no exception to being hit by the global financial crisis in 2007. 2008. Brazil experienced two quarters of recession, as global demand for Brazilian commodity-based exports fell decreased. However, Brazil has shown signs of recovery as the top emerging market. In 2010, as a result of growing consumer and investor confidence, the GDP growth rate reached 7.5%, the highest growth rate in 25 years. Due to high interest rates, Brazil is an attractive destination for foreign investors. Due to the high capital inflow, the currency appreciated and hurt Brazil's manufacturing sector, forcing the government to intervene in the foreign exchange market and increase taxes on foreign capital. President Dilma ROUSSEFF has maintained the previous administration's commitment to central bank inflation targeting, a floating exchange rate and fiscal restraint. The administration implemented a more expansionary monetary policy in 2012 to revive economic growth, however, the efforts failed to stimulate growth as expected. Brazil adopted an inflation target in 1999, soon after adopting the floating exchange rate system. In this regime, monetary policies directly influence the lending rate of households, the financing costs of businesses and exchange rates. request directly. On the other hand, if the government cuts taxes, households' disposable income increases and people spend more on consumption. This increase in consumption will in turn increase aggregate demand. Fiscal policy also changes the composition of aggregate demand. When the government runs a deficit, it issues bonds to meet some of its expenses. In this process, private investment is discouraged. Holding other factors constant, a fiscal expansion will raise interest rates and displace some private investment, thereby reducing net output. In an open economy like Brazil's, fiscal policy also affects exchange rates. In fiscal expansion, interest rates rise due to government borrowing, which attracts foreign investors and thus the exchange rate appreciates in the short run.