Two important policy goals of the government and the fed

Assignment Help Business Economics

Reference no: EM13839419

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.

Assume that 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 affect any policy changes you discussed in Part 1?

Reference no: EM13839419

Questions Cloud

Raise the gasoline tax as way of reducing air pollution : Suppose the government decides to raise the gasoline tax as a way of reducing air pollution and traffic congestion to their optimal levels. Which of the following describes why Pigovian taxes, such as gasoline tax, are unlike most other taxes?

Cash flow table showing all time increments and cash flows : A farmer just purchased a tractor for which he had to borrow $20,000. The bank, using an 8% interest rate, offered a choice of three payment plans as shown below. The farmer’s Minimum Attractive Rate of Return (MARR) is 15%. In EXCEL create a Cash Fl..

Nobody is truly charitable-they just give money to show off : Suppose that Joe enjoys and repeatedly does stupid things like getting heavily into debt and insulting police officers. Do these actions constitute systematic errors? If he gets what he wants each time, are his stupid actions even considered to be er..

Markets capable of fixing themselves : Do you think governments should step in and help an economy move to potential or are "markets" capable of fixing themselves? Carefully consider the impact of falling prices.

Two important policy goals of the government and the fed : 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 al..

What would be subsequent steps-fiscal and monetary policy : 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. Make sure you include both the positive and negative effects of your actions, and..

Demonstrate again that expenditures and incomes depend : Our recent recession seems to demonstrate again that expenditures and incomes depend on each other. If markets do not self adjust, how can a decline in spending lead to a negative process that ruins an economy? (Consider referencing the "Keynesian Cr..

Assuming that the prevailing annual interest rate : On Jan. 1, 2000, you purchased a bond that will pay $1,000 on Dec. 31 of each year from 2000 until 2019. It is now Jan. 1, 2015, and you decide that you would like to sell the bond. Assuming that the prevailing annual interest rate on that day for fi..

Statement we live in mixed economy-not purely market economy : Think of a business firm you recently visited (such as Walmart, Home Depot, Red Lobster, Barnes & Noble, McDonalds, etc.). What motivated the producers of all the individual products in the store to make them and offer them for sale? How did the prod..

User Account

All Pages