Recommendation for the Current Economic Recession

In: Business and Management

Submitted By tinky
Words 1119
Pages 5
1st off, tell your teacher the President has nothing to do with interest rates. The Fed (Federal Reserve or Central Bank) controls that.

The Fed would LOWER interest. If that fails, they would increase the money supply

The President MAY, on advice, ask Congress to INCREASE spending, using the money the Fed has bought Treasury securities with, to stimulate the economy. You NEVER ever raise taxes during a recession.
If he wants not to lose his job by turning USA into a non-market, Government controlled economy, he should allow the Federal Reserve Board to deal with interest rates: whether or not the Fed succeeds in increasing employment by reducing interest rates is not the President's concern. 2. President's focus should be on how by the Government's legitimate actions, the spending power of the households and businesses can be increased. It seems that he has no choice but to continue the stimulus spending for another year. But that alone may not help sustain fall in unemployment rate. He must reduce taxes at the lower levels of income drastically and reduce the corporate tax rates for the next two years so that their effective disposal income increases and they buy more locally produced goods and invest in capacity to produce more. Of course, reducing taxes would mean, the Government will have a larger deficit and high deficit can cause problem of inflation later besides making it costlier for private firms to borrow for their capital projects that create employment. Therefore President should do well to cut certain government expenditures drastically to contain the deficit and further growth of government debt. He must understand that if the expenditure on research and development or on health care or military activities is kept constant or reduced for two years, the heavens will not fall.…...

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