Question

In: Economics

You are the financial policy advisor for President Trump/Biden (whoever wins on Tuesday). Based on what...

You are the financial policy advisor for President Trump/Biden (whoever wins on Tuesday). Based on what we know about the economy today what would you advise the President to do help the economy?

Factors to consider

A) what phase of the business cycle are we in?

B) is main problem inflation or unemployment?

C) What do economic indicators point to? GDP (up/Down) ? Stock market? Housing market? Consumer confidence and spending?

D) Raise or lower taxes?

Using the data you can find and you knowledge of economics as well as your own opinions write a 5 paragraph paper to the winner of the election advising them how to correct our economy.

Solutions

Expert Solution

Answer:(A)Due to covid-19 pandemic US economy again goes into recession period.After Great recession (2009),U.S economy doing fairly good and was in expansion phase before the pandemic hit economically almost every country of the world(except China).

(B)In my view they are both(inflation and unemployment) equally big problems and also interconnected in current scenario.Due to covid-19 pandemic,uncountable citizen lost their jobs,thus,it leads shockingly unemployment issue.Now problem is that middle class and poor section of society don't have enough money to buy essential goods for themselves as well for their family.This problem can only be sought out when employment increase,common citizen purchasing power increase.

(C)Economic Indicators to:

(1)GDP-It help us to interpret general well-being of the economy.Increase in GDP means economy going in right direction and vice-versa.

(2)Stock Market-When stcok market doing well or going upwards,it can be said there is good amount of inflation in economy as well as increase in GDP.

(3)Housing Market-When liquid money floats on large basis in economy,housing market will flourish,when people tend to save their due to any reason housing market will go down.

(4).Consumer confidence or spending-It is one of the main factors of GDP.Consumer spending is an indicator of early signs whether economy is in right path or slowing down.

(D)There is no point of raising taxes at this point of time when people are jobless,applying unemployment compensation and don't have enough money to buy essential goods.If federal reserve not able to lower taxes,they must not increase it.

Correction of Economy

Positive scenario is when country is recover from covid-19 pandemic,USA  still remain biggest economy in the world by for many years.But there would be change in scenario,people tend to be more skeptical when going any social or public gathering means profit margin of normal restaurant and cinema would be farly less for quite sometime.

But when we fully recover from this pandemic slowly but gradually we come out for socialisng.Restaurant and cinema again start recovering,although initially they need to do the seating arrangement with respect to social distancing.And then later on sports like activity with crowds full of stadium start again.

Economy having worst decline since Great Recession(2009),records number of people become jobless and subsequently applying for unemployment compensation.Government and Federal Reserve need to be in rapid mode to take economy towards pre covid-19 pandemic period.

There is need to categorize different sectors which are hit by pandemic crisis also categorize different states because demographically all are different.

Service sector need to take into consideration all the precautions for customers as well employee,then only confidence start building up of customers and things become normal at fast pace.


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