Week 6 You Decide - Gm545

As the new Senior Economic Advisor for the United States President I understand that the economy has been hit harder than it has in years and would like to submit a recommendation that will help the United States get back on its feet. The unemployment rate is at its highest that we have seen it in over 20 years, 8% and rising and the inflation rate is at -2.4% and prices are falling.

The Fiscal policy is changes in the taxing and spending of the federal government for purposes of expanding or contracting the level of aggregate demand. In a recession, an expansionary fiscal policy involves lowering taxes and increasing government spending. The Monetary policy is under the control of the Central Bank and is completely discretionary. It is the changes in interest rates and money supply to expand or contract aggregate demand.

I believe lowering the interest rates would be a good start. This would allow businesses and it's consumers to be able to afford to invest more money and in the end get more profit out of their investment. This will also mean that there will be more machines, factories, and building purchased and could also increase production. The second thing that I would recommend is to lower the taxes and increase the government spending. This would allow more money available in the economy. The third and final thing is to raise the commercial bank reserve requirements. This will allow banks more lending capabilities which will allow more money into the economy through bank lending. All these things combined would give our economy a great start into the future because it will eventually help the economy and its people to get back on their feet.