Current Economic Conditions: the Role of Fiscal and Monetary Policies in the United States

3714 words 15 pages
Current Economic Conditions:
The Role of Fiscal and Monetary Policies
In the United States

July 25th, 2012 Over the past ten years, we have seen a weary world with uncertain economic turns with more downswings than upswings. Some might say the worst affected economies have been the once invincible super-powers of the western world such as Western Europe and the United States. The ongoing uncertainties of the Euro as well as numerous bailouts have caused more speculation and fewer expectations. Critics argue that with proper policies and regulations the financial meltdown could have been assessed more efficiently or altogether prevented. The realization of uncontrollable powers such as political environments, foreign economies,
…show more content…
Taxes are a subject, aside unemployment and the GDP, in which the media largely focuses on. The political battle coming up in November will be trenched with arguments on taxes. In a recent article on the Wall Street Journal “Obama Tax-Increase Plan Gains Supporters,” Obama “restated his desire last week to preserve existing tax rates for incomes under $250,000, while allowing taxes to rise for households making more than that amount,” while his opponent Romney sees it as detrimental for small business growth. While taxes are seen as an opportunity to create jobs, there are other alternatives such as adjusting interest rates.
When the interest rates are cut, we know that investments increase along with GDP, production, income, spending, and most importantly jobs. The economy has seen this theorized domino effect increase ever so slightly. Some of the expansionary policies implemented during the “Great Recession” of 2008-2009 started in late 2008 when the US Central Bank decided to cut interest rates (Lewis.) Lower interest rates, as we have seen in recent months like June at 1.62 percent, are one way the Federal Reserve can encourage people to borrow and spend. The GDP growth rate, although not negative, has not increased enough to spark the multiplying effect on production, income and so on. The interest rate cuts did help slow down the downward spiral of the economic crisis in 2008, but we are

Related

  • The Consolidation of Fidel Castro’s Power Between 1959 And1961 Was More of a Result of Domestic Issues Rather Than United States Economic Policies.
    1500 words | 6 pages
  • Healthcare in the United States
    1875 words | 8 pages
  • Minimum Wage in the United States
    2557 words | 11 pages
  • The role of a public administrator in the United States
    1070 words | 5 pages
  • Current and Future Economic Issues Impacting Healthcare Sector
    2835 words | 12 pages
  • The Impact of Globalization on Africa's Social and Economic Conditions
    1607 words | 7 pages
  • Expansionary Economic Policy
    1528 words | 7 pages
  • Ap Us History Dbq ( When World War I Broke Out, the United States Declared Its Policy of Neutrality. to What Extent Did the United States Follow a Policy of Neutrality Between 1914 and 1917? )
    1160 words | 5 pages
  • The Current Rating System in the United States
    2060 words | 9 pages
  • Monetary Economics
    2172 words | 9 pages