BUS ECON (You Decide Activity) Assignment Example | Topics and Well Written Essays - 250 words

BUS ECON (You Decide Activity) - Assignment ExampleThe first thing that the government commonly does in cases like this is to execute monetary policy, a mandate of the Federal Reserve. It lowers provoke rates thereby increasing liquidity and helping customers and line of credites get back on foot. However, as many analysts would say this whitethorn end up hurting the economy in the long run as it may head for the hills to a rise in inflation, something that was witnessed in 2001 in the U.S (Desai, 2011).On the other hand, the idea of increasing taxes and decrease government spending will hurt the common person. This strategy is bad for the economy as consumers and business people will suffer and economic growth will slow down before it picks up again. Such tough measures are not good for the common man as they only pull in the rich (MacEwan & Miller, 2011).The best approach will be the Federal Reserve to retain the current interest rates and be involved strongly in selling bond s in order to increase the wedge reserve requirement. This will lead to increased money supply in the economy, as tumefy as stability of financial institutions (Mullard, 2012). However, the federal monetary policies may not be enough and this necessitates the need for twain fiscal and monetary policies to help the economy. Some of the fiscal measures could include increased government spending and dark of taxes. This will balance the economy as the effects of these decisions will be considerate to consumers, as well as businesses (Desai,