Given the severity of this recession characterized by high unemployment and low inflationary rates I believe that a two sided approach is necessary utilizing both expansionary monetary and fiscal policy would be the most appropriate remedy as proposed by Allison Tanney.
Under Fiscal Policy:
I would reduce taxation which will encourage businesses to expand and in so doing create employment. The reduction in taxation will also positively affect the disposable income of consumers thus causing total aggregate demand to increase. This is the opposite of what Kathy lee was proposing her proposal would remove money from the economy which would have a negative ...view middle of the document...
This was proposed by Allison Tanney and I totally agree with her.
Under Monetary Policy:
Under Monetary policy the president may want to consider requesting or lobbying the fed to engage in one or a combination of these strategies.
In open market operations the fed should purchase securities (bonds) in the open market thus increasing the supply of money in the economy. This is one point I agree with Patricia lopez and Allison Tanney on.
The Fed may also consider reducing the reserve requirements for banks this will have a multiplier effect as banks will be able to generate more loans; providing more capital for small business creation and expansion positively affecting the employment rate.
The Fed may also reduce the discount rate by so doing the feds will make funds cheaper for banks and as a result the banks will be able to lower their interest rates to businesses and consumers which will also stimulate the economy.
Increasing the reserve requirement and discount rate as proposed by Patricia lopez and Allison Tanney will have a contractionary effect on the economy when an expansionary effect is needed.
According to Raymond Burk’s advice the president cannot lower interest rates but may lobby the fed to do so which would make borrowing cheaper; thus acting as a stimulus for business. Allison Tanney proposed increasing interest rates she is incorrect as this would decrease stimulus for growth in the economy.
Source Retrieved June 9th 2012 : Kitwana A. Folkes MBA university of North Texas