Question

The topic of this paper is how to fix the 2008 reccession using fiscal policy. Below are my notes, and I need help transforming them into a full on paragraph.

Please formulate a paragraph based on my notes.

Recommended Fiscal Policy Instruments and Actions, expected results/rationale

Taxation: To promote consumer spending and boost the manufacturing activity, there should be some relaxation given by the government in tax structure.

Government spending: Economy is in a very bad shape. To recover from the same, Government should give some subsidies and relaxation to boost the consumption and promote the manufacturing and entrepreneurial activity.

Certain unemployment bonus to be given to the public.

To boost the entrepreneurial activity, subsidies should be given in setting up the enterprise.

Answer 1

Fiscal policy of a country focuses on improving the employment rate and achieving a stable (and sufficient) growth rate of the economy. In order to overcome the recession of 2008, I propose the following fical measures. Tax incentives and coupons should be provided by the government to enhance investment activity and regain investor confidence. A positive business environment is necessary to achieve stabilised growth. Although this would raise the level of profits and might cause a little inflation, a parallel (indirect) increase in employment will stabilise the prices and the economy. The government also must increase its spending- money should be spent on providing subsidies on counsumer goods (especially those necessary goods with a high demand). This will raise effective demand in the economy and also indirectly reduce unemployment. Infrastructure development should also be a focus of the government spending- one that will promote manufacturing activity.

Both of the points above must be applied for entrpreneurs, that is, they should be given tax discount/ holidays as well as provided subsidies (especially for setting up of enterprises) to increase competition and lower their production costs. Transfer payments (payments for unemployment- those corresponding to which no production is done) could be opted for so that there is a positive social environment which, in turn, has a direct economic impact.

Don't forget to give a thumbs up! Please note that I added/modified one point on my own, you might omit it if you wish. Thankyou!