After thorough consultation with colleges it is my opinion that the appropriate response during this economic downturn is to take an expansionary fiscal policy approach, and to encourage the FED to consider appropriate expansionary monetary measures as well. Though there have been suggestions to increase interest rates and lower government spending, such actions would further stagnate any economic growth. It is the lack of public spending and loss of jobs that have set such an economical ambience. To increase taxes at this time would further diminish the public’s available spending power, and a cut in government spending would take a negative effect in the current job market. It is then in my opinion that the president along with congress increase government spending, and lower current tax rates. It is may also be of importance to consider stimulus measures such as tax credits to increase the available spending power to the public.
In alliance to such fiscal policy it would also be suggested that recommendations to monetary policy be made. It is important at this time to increase the availability and flow of money. Suggestions that interest rates increase and reserve requirements be heightened would only counter act our recommendations to fiscal policy. If interest rates are increased then the expense to borrow money would not result in positive effect, as would the increase in the reserve requirements, in which banks would have less monies available to lend. So it is my opinions that the president recommend to the FED to lower interest rates to make needed monies more easily available, and to also suggest a lower reserve, making more monies available for lending
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