1) Write a paper analyzing different approaches that might be used by Keynesian
ID: 1097066 • Letter: 1
Question
1) Write a paper analyzing different approaches that might be used by Keynesian theorists and 2) monetary theorists to promote long-run macroeconomic stability. 3) Examine the impact of persistent budget deficits on the trade deficit and analyze the options available to policy makers when national savings presents opportunities to improve the trade deficit. 4) Appraise the position of supply-side economists as it relates to government deficits. 5) Evaluate recent national economic policies as they relate to the magnitude of the trade deficit and 6) analyze the arguments for protectionist policies and the effect, if any, upon the trade deficit.
Explanation / Answer
Due to multiple posts, only the first 4 questions are answered here.
The Keynesian theory states that private sector decisions sometimes lead to inefficient macroeconomic outcomes and thus focuses more on the public sector for policy making.
Monetary theorists are more inclined towards money and economies.
Some of the approaches that can be used by these theorists to promote long run macroeconomic growth are as follows:
Persistent budget deficits create a heavy strain on the trade deficit, as the government finds it hard to pay for its imports.
When national savings are present to improve the trade deficit, the policy makers can use the savings to pay for its imports and other deficit. Savings imply investment, which in turn lead to economic growth and income in the long run.
Supply side economics argues that economic growth can be created by lowering production barriers and increasing investment.
The major way through which they deal with deficit is by lowering marginal tax rates and decreasing regulation.
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