Question

write to either the President (on fiscal policy) or to the Chair of the Federal Reserve (on monetary policy) describing a specific policy action that you believe should be taken at this moment in time (e.g., lower taxes or buy bonds) and explain why you would take the action (what is currently happening in the economy and what will this action accomplish?). Your thoughtful post (of between 200 - 400 words) You can learn about the current state of our economy by consulting newspapers or news websites.

Answer 1

pl rate

To: The President, Fiscal Policy

Subject: increase government spending and reduce taxes to stimulate the economy

Mr. President,

I would like to say that following policy modification should take place to stimulate the economy.

1.    Government spending should be increased in specific areas such as manufacturing and health care to increase the demand because government spending will act as a multiplier to the aggregate demand. With specific focus on selected industries will help in better and more number of employment opportunities. It will increase the disposable income also and it will help in increasing the demand of other products.

2.    Offer subsidies to industries on the basis of their production activities. It will help them to work even if the prices are low. At lower prices of the products, demand will be high and more products will be sold. It will put the economy on the track of growth and development. So, subsidy will help producers to sustain in the economy.

3.    Wave off taxes for a particular period for entrepreneurs and small businesses to encourage them to start making productive activities. It will bring back employment to many people. It will increase the demand.

Measures taken by fiscal policy, will make monetary policy to be more effective. So, monetary and fiscal policy complements each other in helping economy to come out of recession and move ahead with growth.