As we enter our seventh full year of economic downturn, with the REAL unemployme

Question

As we enter our seventh full year of economic downturn, with the REAL unemployment rate double the historic norm, a declining average wage rate, with 46-50 million Americans below the poverty line collecting food stamps, ever-growing annual deficits and an unsustainable national debt at $18 trillion, what do you think government should be doing regarding budgetary (taxing and spending) policies n order to address these issues to bring the U.S. back tc prosperity? Give a rationale for your opinion based on your knowledge of economics to date.

Explanation / Answer

With growing unemployment as well as declining wage rates, the government should focus on bringing more investment into the economy. Thiswould lead to creation of more jobs as well as improvement in the standard of living of the people.

The government can also resort to either expansionary fiscal policy or monetary policy as a means to increase consumer incomes.

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