You Decide Case Study

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You Decide The U.S. economy has fallen into a severe and deep recession. The unemployment rate is at 8% and the inflation rate is -2.4 percent, meaning that overall, prices are falling. After discussing this issue in depth with my colleagues and collecting all their recommendations, I concluded the following: I agree with Raymond Burke in lowering interest rates. I believe it will help businesses and consumers to get back on their feet, It will get back the consumer spending back up, and it will encourages entrepreneurs to start up new business and investments. I agree with Allison Tanney in buying bonds. I believe this will increase the money supply and will create a money cycle as the investors will invest their money in bonds and this paid money will help to pay interest for other…show more content…
I do not agree with her as well on raising the bank reserve requirements as it can restrain lending from banks and as a result it will shrink the economy growth. After analyzing my colleagues’ recommendations, and as the president’s senior economic advisor, I recommend the following: * We should lower income taxes. This shall increase the aggregate demand as the consumer disposable income will increase, which leads to an increase in the consumer spending. If the consumer spending increases, it will bring back up the flow of business and operations which means more jobs opening in the market and low unemployment rates. * Lowering banks’ interest rates. This will increase the consumer consumption as they will borrow at lower rates and therefore it will encourage them and business owners to investment more and increase the economy growth. * The government should increase their spending. This will increase the flow of money in public and private sectors which lead to empower businesses and bring people back to work after the
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