Econ—545 Sample 250 Word Essay
Barbra J. Kotovich
Selling bonds reduces the money supply, thus increasing the value of money, but the reserve is not changed if banks buy bonds, says Patricia and Allison, but is not good monetary policy for the Feds to raise the reserve requirement, due to its tendency to increase inflation more than desired. Allison’s suggestion to raise interest rates is useful for selling bonds. Decreasing government spending as suggested by Kathy may lead to a deeper recession. If the government increases their spending as Allison recommends, this will raise aggregate demand, enhance spending power, increase the value of money, drive up interest rates and inflation to normal levels, and create new job opportunities to meet new productivity levels. In other words, for our real GDP to increase, government spending, business investments, consumer spending and net exports must all increase proportionately. Add less taxes as Allison suggested, and it will further increase positive expectations about future economic growth and the value of the net exports, which encourages stronger purchasing power of the business and consumer sectors of the economy to bring in more tax revenue from higher income being generated by the business cycle at full employment, thus pulling the economy out of deep recession over the short run and long run. I recommend that the President Implement strong fiscal and monetary policies to sell more bonds, buy more government securities in the “open market, raise interest rates, increase government spending and lower taxes which will boost the economy out of the great