International Economics Paper
Lisa Bailen
ECO 372
September 9,2015
Brian Leben

International Economics Paper

The test for distinguishing good stimulus ideas from bad ones; is the proposal likely to raise the economy to a sustained, higher level of growth? Presidents have limited powers, particularly with something as big and ungainly as the U.S. economy. The president has little control over the massive forces such as technological advances, consumer-buying habits, outlines of international trade and variations in demographics (Heritage.org, 2008). In order to cut taxes, boost government spending or change laws to encourage investment, a president must gain the backing of Congress, which is not always easy. The president has little control over the government agency that probably wields the economic power, the Federal Reserve (Heritage.org, 2008). Congress on the other hand is the legislative, or lawmaking, branch of our national government. It shares power with the president and the Supreme Court. The writers of the U.S. Constitution thought Congress was so important, they listed it first! Congress has two parts, the Senate and the House of Representatives (scholastic.com, 2015). Congress has the ability to help pass stimulus plans or assist in stopping inflation. Example of the stimulus plan, lowering interest rates, increasing government spending and quantitative easing, to name a few. To stop inflation, raise interest rates and decrease government spending (investopedia.com, 2015). Federal Reserve Chair nominee Janet Yellen emphasized that one of the Federal Reserve's primary responsibilities is to pursue its dual mandate for maximum employment and stable prices. The Fed attempts to reach these two goals through fluctuations in its target interest rate. It decreases this rate when the economy is struggling, and it increases the target