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Government spending and lower income taxes

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Reference no: EM131770614

The U.S. economy has fallen into a recession. The unemployment rate is 8% and is expected to increase. The inflation rate is -2.4% meaning overall, prices are falling. An economist suggests the following to policy makers:

  • Fiscal Policy: Increase government spending and lower income taxes.
  • Monetary policy- Increase the money supply by buying bonds in order to increase interest rates.

Do you agree or disagree with the suggestions for both fiscal and monetary policy? Support your answer.

Reference no: EM131770614

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