Keep unemployment and inflation low

Reference no: EM13787943

There are 2 parts to this question. The first part is to make an outline of the key assignment. The key assignment is the second part. The first part should list all all topics and sub-topics of what is in the key assignment which is due by 5:00 pm Dec. 12, and the second part is due the 14th of Dec. at 6:00 pm if possible. The work done has to be original with little or no quotes and never been used by another student for any course. For the key assignment there must be a list of references and in-text citations in APA form. It must have a deliverable length of 1,500-2,000 words.

Assignments:

Part 1

Your first task is to post your own Key Assignment Outline to the discussion area so that other students are able to review your plan. The purpose of this assignment is to help improve the quality of the Key Assignment Draft you will complete next week.

Part 2

Key Assignment Draft

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

Okun's law

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: EM13787943

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