Question

What do you believe is the most pressing problem in today's economy? Explain why you have selected the problem you did. What policies do you recommend that the government should adopt to help this situation?

Answer 1

The most pressing problem in the economy is the growing income disparity among the different class of people that leads to unequal distribution and passion of the resources. This is the problem because it makes rich to be more rich and poor to be more poorer with time. It affects the creation as well as stability in the aggregate demand and economy suffers. Besides, the government has to take the burden to funding of the programs that are made for the poor people or people with poor economic background. It causes increased level of government spending, creating deficit and attracting more national debt. It has been in the form of cycle for each year in the economy and middle class people and coming generation, will suffer from higher level of tax, deductions and other expenses to meet their requirements of health and social securities. Further, class conflict will also grow in the economy.

To resolve the problem, government should work on following recommendations.

1. Implement human capital development programs for poor people, minority community or specifically for those who cannot avail it on their own so that people become highly skilled and get high paying jobs or start their own business. It will makes these class of people to raise their income level without taking away the income from the rich people.

2. Implement a taxation system that is more cooperative or favorable to the people with the low income class. They should be given an additional rebate in the taxation filing if they spend their income on education, skill development and other avenues that help to build wealth. Besides, a lower slab rates should also be applied while taking higher income classes in confidence.

3. Take initiatives to reduce the cost of essential services such as health care and focus to develop the network that delivers preventive care to the people.

Above recommendation will help to resolve the problem.