The U.S. economy has fallen into a recession. The unemployment rate is 8% and is expected to increase. The inflation rate is -2.4% meaning overall, prices are falling. An economist suggests the following to policy makers:
- Fiscal Policy: Increase government spending and lower income taxes.
- Monetary policy- Increase the money supply by buying bonds in order to increase interest rates.
Do you agree or disagree with the suggestions for both fiscal and monetary policy? Support your answer.