You Decide Business Economics Essay

293 WordsJul 24, 20122 Pages
The U.S. is a facing a severe and deep recession, and as the Senior Economic Advisor to the President I appreciate the analysis and feedback that my colleagues have provided. Let me first state that I agree with Raymond Burke in the fact that we must first individualize fiscal policy and monetary policy since they are both designed for economic growth and stability. Furthermore, I agree that we should lower interest rates to help consumers and businesses. Lowering interest rates do not always result in increase spending as individuals do tend to save during tougher economic times, and consumers may be more reluctant to hold on to their discretionary income. However, In the long run consumers will gain confidence in the economy and begin to increase their spending. When this happens it will lead to the creation of jobs which will in turn reduce the unemployment rate. I disagree with the former Economic advisor to the president on the stance of a fiscal policy that would raise taxes and reduce government spending. Raising taxes will ultimately reduce the spending power of consumers, which will then lead to a continual increase in the unemployment rate. In addition, this is an election year for the president and raising taxes and reducing government spending can unfavorably effect his reelection opportunities. In conclusion, I value the recommendation from Allison Tanney on expansionary fiscal policy and expansionary monetary policy. In order to combat inflation the Fed has to increase the discount rate and federal funds rate to reduce the money supply. This can be accommodated by raising the reserve requirement. I believe fiscal policies will pull our economy out of this recession as it will get the American people spending money again and grow our

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