Develop a policy that will help get the economy out of the recession using only changes in taxes
Assume that you have an economy that is in the early months of a recession. Unemployment is 7.2% and rising. Inflation is at 1.2% and relatively stable at the level. The GDP is at $13.6 trillion. Assume that you are on the Council of Economic Advisors which is the group that advises the President on economic policy issues. It’s your job to propose an Expansionary Fiscal Policy to help alleviate the problems associated with the recession.
1. Consider a policy based on Taxes. Develop a policy that will help get the economy out of the recession using only changes in taxes. You don’t need to get into changes in specific types of taxes but you do need to explain whether taxes should increase, decrease or stay the same. Be sure to explain why the policy will be successful.
