Gdp ratio and a growing budget deficit

Assignment Help Macroeconomics

Reference no: EM13755802

Two important policy goals of the government and the Fed are to keep unemployment and inflation low, while at the same time making sure that GDP is increasing at an average of 3% per year. It is important to have the right mix of policies and that all the variables be timed perfectly.

Part 1: Assume that the country is in a period of high unemployment, interest rates are at almost zero, inflation is about 2% per year, and GDP growth is less than 2% per year. Suggest how fiscal and monetary policy can move those numbers to an acceptable level keeping inflation the same. What is the first action you would take as the president? As the chairman of the Fed? Why? What would be your subsequent steps? Make sure you include both the positive and negative effects of your actions and include the trade-offs or opportunity costs.

Include the following concepts in your discussion:

Demand and supply of money

Income and Productivity

Interest rates

The Phillips curve

Taxation

Government spending

Wages

Aggregate supply

Aggregate demand

Long run and short run

Costs of inflation

The multiplier and the tax multiplier

An open vs. a closed economy

The idea of tax rebates to stimulate the economy

Part 2: Assume the country is in a budget deficit and carrying a very large debt. Discuss the dangers of a high debt to GDP ratio and a growing budget deficit. Would this change any policy changes you discussed in Part 1?

Reference no: EM13755802

Questions Cloud

Describe the importance of standardized data collection : Analyze the importance of standardized data collection and reporting in health care, and support your response. Next, determine two functions of standardized data collection that could improve the quality of health care services on a global scale...

Supply and demand for health care services : Evaluate the fundamental reasons why price and utilization economic factors in the healthcare setting influence competitive market status in regard to supply and demand for health care services.

Analyze all of the costs and benefits of outsourcing it : Analyze all of the costs and benefits of outsourcing IT, and present at least four well-supported reasons why the company should keep the department

Explain systems development life cycle : You are talking with another student who is complaining about having to learn the systems development life cycle because he or she is not going to work in an IT department

Gdp ratio and a growing budget deficit : Discuss the dangers of a high debt to GDP ratio and a growing budget deficit. Would this change any policy changes?

What was purpose of notice from the imperial german embassy : What was the purpose of the notice from the Imperial German Embassy?

How societies in early modern era viewed foreign influence : Describe the place of religion in the policy of governments in the early modern era. Explain how societies in the early modern era viewed foreign influence.

Design a program that accepts a players team number : The Midville Park District maintains five soccer teams, as shown in the table. Design a program that accepts a player's team number and displays the player's team name

Evaluate the various methodologies for sociological research : Evaluate the various methodologies for sociological research. Apply the sociological perspective to a variety of socioeconomic and political problems.

User Account

All Pages