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Economics and Robert Reich

Just looking for a paragraph or two for each question to get a discussion going.

1) Research and discuss recent Federal Government Fiscal Stimulus packages and Federal Reserve policies to control liquidity and counter the credit crisis. What has the Federal Government and the Federal Reserve been doing? Why? What policy tools have they been using?

2) Inflation has traditionally been a concern of the Federal Reserve. Recently, there has been the possibility of deflation. Should the Fed be concerned with deflation of prices? When inflation occurs some economic agents gain and some lose. Who would gain and lose if deflation occurs? Why? What will happen to interest rates and investment according to Keynesian and Classical/ Monetarist theories?

3) Can deflation occur without recession? Will deflation worsen a recession or shorten it? Explain, base your discussion on the theories presented in the text.
Should the Federal Reserve do anything to prevent deflation? What policies do you recommend the Fed follow?

4) Is inflation still a possible threat? What could cause a rise in inflation? Suggest some possible scenarios.

5) Please listen to the podcast of Robert Reich at the Commonwealth Club. http://www.commonwealthclub.org/events/archive/podcast/robert-reich-inequality-all-112113

What does Robert Reich suggest would be a solution to the slow recovery of the economy? What is his view of debt? Do you agree or disagree? What policies do you suggest for the economy? Why?

Solution Preview

Here is an outline. Let me know if you need more help. I will be out of touch tomorrow and possibly Wednesday, but will attempt to check sometime on Wednesday if you need further help.

Research and discuss recent Federal Government Fiscal Stimulus packages and Federal Reserve policies to control liquidity and counter the credit crisis. What has the Federal Government and the Federal Reserve been doing? Why? What policy tools have they been using?
A stimulus was created in 2008/2009 that offered tax breaks and continued unemployment benefits while also putting money into job creation through government projects and incentives. This was successful in helping to mitigate some tax problems people were facing and kept many families with incomes while looking for work. Though the stimulus was projected to save 900,000 jobs, it actually was more in the area of 640,000 jobs saved. The main purpose was to smooth out consumer confidence and instill more confidence in the economy and monetary policies after the recession.
To promote needed job growth, estimates place successful job growth at 125,000 and 150,000 jobs per month, the American Jobs Act was passed and it included tax breaks as well, especially for small businesses. The need for improvements to infrastructure was another part of the stimulus AJA, providing those improvements and jobs at the same time. It also included an extension of the unemployment benefits to those still looking for work.
2) Inflation has traditionally been a concern of the Federal Reserve. Recently, there has been the possibility of deflation. Should the Fed be concerned with deflation of prices? When inflation occurs some economic agents gain and some lose. Who would gain and lose if deflation occurs? Why? What will happen to interest rates and investment according to Keynesian and Classical/ Monetarist theories?
Deflation is not necessarily a bad thing when one considers that the recovery of the economy took longer than expected and that job growth, especially for middle income jobs and job types. Many workers continue working part time ...

Solution Summary

Several discussions are outlined on inflation, stimulus packages, deflation, and Robert Reich's suggestions. References included.

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