Assesses the suggested policies with regard to whether they are are described accurately
Your task is to write a report that does the following:
1) assesses the suggested policies with regard to whether they are are described accurately and rely on sound economic reasoning and whether they will be effective in fighting the recession
2) where appropriate, proposes alternative measures that would be better suited to help the economy in the recession
3) provides explanations for your suggestions and your findings so that the politician’s advisor does not make these mistakes again.
Please submit the report in connected prose, not a bullet point list.
The speech is presented below:
“After carefully studying the economy over the last three quarters, we have to conclude that our country has entered a recession. I cannot help but wish that we could have come to this conclusion sooner so that we could act appropriately. In the future, I propose we assess the competency of our National Statistical Agency which should have been able to notice the deviation of our economy’s GDP from potential earlier and with ease.
Nonetheless, I assure you that the government is fully prepared to act swiftly to combat the recession with the arsenal of tools that both the fiscal and the monetary authority have at their disposal.
On the fiscal side, we are proposing to pause most of the infrastructure projects that were initiated last year. It is important that the government does not take up any extra resources when the economy is struggling. We do, however, suggest that the government introduces a temporary tax rebate which will surely stimulate the economy, as people will without a doubt spend all of the extra income. This temporary stimulus will be very effective in promoting spending and stimulating the economy. The tax rebate will most likely result in the increase of the budget deficit which we should be funded by going to the international credit markets. The fact that international investors are demanding higher interest rates on our bonds reflects their trust and confidence that our country is capable of producing the extra output that is necessary to service out debt.
On the monetary side, we propose that the central bank raise the reserve requirements which will make it easier for people to obtain loans. In addition, over the next month the Central Bank should sell a vast amount of short-term government bonds in an effort to decrease the interest rate in the economy. Even though the decrease in interest rates will disincentivize the holding of money by the general public, it will promote investment which will help us overcome the economic slowdown.
With the government fully armed with the plan presented to you today, we would expect the current recession to be over soon so that we could go back to the prosperous economy that we normally enjoy. ”
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