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Economics
Tutor: None Selected Time limit: 1 Day

Policymakers who want to stabilize the economy must decide how much to change the money supply, government spending, or taxes. Why is it difficult for policymakers to choose the appropriate strength of their actions? Which method do you think is better in the long run? Why?

Oct 2nd, 2015

Thank you for the opportunity to help you with your question!

Hi Ellery,

The answer to that question is one that does deserve an answer.  The key to this question is stabilizing the economy.  When a policy maker looks at all of his options, the first thing he does is looks at ways to do spending cuts.  There is always the issue of looking supply and demand and always where to cut taxes.  Economically policy makers often go for big business first and they they look at the income of the wage earners and common people.

When it comes to government spending most of your government officials are always looking at where they are spending the most money.  For instance when you think of the wars that we have had throughout history it cost to finance the war effort, and when you think of the taxes we pay for unnecessary things such as the rise in property taxes and adding on taxes for extra things that the American public usually would not have to pay for, this is what you call frivolous spending.

Its difficult for policy makers to choose the strength of their action is because the make-up of a population can change and the income condition of the economy could change at any given point and time so in the long run it would be easier to stabilize the economy through cutting taxes and bring in more industry and jobs so that the economy can grow and prosper.

Please let me know if you need any clarification. I'm always happy to answer your questions.
Oct 2nd, 2015

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