Purchase Solution

USE OF FISCAL POLICY TO SIMULATE THE ECONOMY

Not what you're looking for?

Ask Custom Question

This is a continuation the above problem. It appears that we both agree that we have identified the economic conditions as recessionary. It appears that the FRB has already tried to stimulate the economy by lowering interest rates and that has proved unsuccessful; therefore, further reductions would probably be futile. We both agree that GDP is very low. Inflation is stable and not very high. Should the economy be left alone to see if it will make the necessary adjustments? Or should the government use fiscal policy and give tax cuts and tax credits? Would this stimulate the economy sufficiently? Or would it be better for the government to do some heavy spending to stimulate this economy. I think the latter would be the best option. Again, am I on the right track? I realize that the last two possibilities would result in a higher budget deficit.

Purchase this Solution
Solution Summary

THIS explains the use of FISCAL POLICY TO SIMULATE THE ECONOMY

Solution Preview

AS THE ECONMIC CONDITIONS ARE RECESSIONARY. GOVERNMENT MUST USE FISCAL POLICY TO SIMULATE THE ECONOMY. The detail description is as follows:
This is the issue of fiscal policy. Fiscal policy refers to nation's policy relating to the government spending, taxing, borrowing and debt management. The main objectives of the fiscal policy are:
1. Mobilization of resources
2. Acceleration of the economic growth
3. To minimize the inequalities of Income and Wealth.
There are three main constituents of the fiscal policy, these are:
1. Taxation policy
2. Public Expenditure policy
3. Public debt policy
All these ...

Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

View More Free Quizzes
Related BrainMass Solutions

  • Does an active fiscal policy help or hinder long run growth

    List reasons why an active fiscal policy hinders the long run growth of the economy. Should the US use fiscal policy to encourage long run growth of the economy? Why?

  • Monetary and fiscal policy to stimulate the economy

    This posting discusses the use of fiscal and monetary policy and its effectiveness in stimulating the economy.

  • Revival of the Economy with Tax Cuts

    The fiscal policy refers to the government policy and actions that seek to affect the direction of the economy through changes in government spending or taxes.

  • Time Lags of Monetary and Fiscal Policies

    When there is a time lag of monetary and fiscal policies then the economy will be in depression. During depression the government has to use their tools i.e. monetary and fiscal policy very effectively.

  • Pretend as if you are an economist and explain

    The learning objective is to understand the role of fiscal policy and to explore your beliefs about how the economy should function.

  • Discretionary and nondiscretionary fiscal policy

    Also, the use of fiscal policy also taken place when inflation appears, it is the situation where the economy grows too fast (Dinga, Ionescu & Pădurean, 2010). In this situation, the government can decrease the expenditure and help economy.

  • Contractionary Fiscal Policy

    This type of policy would be utilized when the country is facing inflation because it will help to close the inflation gap, restrain the economy, and decrease the inflation rate (CONTRACTIONARY FISCAL POLICY, 2013).

  • Quantitative Easing

    Moreover these countries have high fiscal deficit and have very high level of borrowing. Easing monetary policy may lead to greater borrowing which can add to the crisis situation. These economies need to have tighter fiscal policy.

  • Fiscal Policy and Monetary Policy

    180913 Fiscal Policy and Monetary Policy Essay 1.) Describe the process of fiscal policy including alternative types and the ramifications/efficiency of its use. Essay 2.)

View More Related Solutions