You Decide Assignment

Currently our U.S economy has fallen into recession. It is a deep recession, one that we have predicted to last approximately one more year. The unemployment rate has risen to 8% and the inflation rate is -2.4%. After careful research I will recommend that we as a country increase government spending and increase the money supply by lowering the reserve ratio to reduce the unemployment rate and help the inflation rate.

I have reached out to many reparable professionals to gain different perspectives while making my recommendation. Below are some points we might consider from each.

Economic consultant: Raymond Burke

- Recommendation: To lower interest rates.

- Lowering interest rates will lower the cost of borrowing that could potentially lead to increase investment spending. This could lead to a healthier economy by enticing banks to lend more to businesses and households. However; I disagree with Raymond because lowering interest rates will not help the dollar exchange rate in the short term and could lead us down the wrong path.

Economic Consultant: Allison Tanney

-Recommendation: To increase government spending. To increase money supply by raising reserve ratio.

- I agree with Allison about increasing government spending. In the short run government spending can stimulate economic growth by increasing employment. This has been used in the past during the great depression and is believed to pull the U.S out of recession. However we do have to watch the burden of debt. This would be effective short term solution. I disagree with Allison when she talks about raising the reserve ratio. I believe that lowering the reserve ratio will in turn increase the bank lending and increase money supply. This will lead to a more effective solution to increase money supply.

Overall our economy is in a deep recession but by increasing government spending and raising reserve ratios we can pull out of the recession in the short run and build a plan for future endeavors.