Expansionary Policy

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Expansionary Fiscal and Monetary Policies
Macroeconomics: ECO 203
Professor Charles Aki
September 1, 2013

The US economy has seen some detrimental changes over the past decade. These changes resulted in unsubstantial unemployment rates, fluctuating interest rates, unstable GDP, and an increase in taxes. The federal government has an obligation to citizens to respond to the changes in the economy that affect each household. Expansionary Fiscal and Monetary Policies are economic policies used by the government to level out the extreme swings in our economy. The development state of US economy has forced the Federal Government to implement changes using their authority in Expansionary Fiscal and Monetary Policies in order to stabilize the economy.
President Bush and President Obama Administrations created and implemented a stimulus package in direct response to the 2008 economic crisis. Government expansion is necessary for economic growth. The government should provide a stable environment for economic growth and maintain the stability of currency, enforce and defend property rights and provide the assurance that private citizens and market place transactions are accountable. This is how resources are cycled into our economy. (Amacher;Pate, 2012) Without government spending, the government would not be able to carry out its duties to the US citizens. Government borrowing and spending stimulates the economy and is risky because it cannot be implemented at any time because of legislation. Many of these policies that allow government spending to stimulate the economy have to pass through Congress. This lag can and does cause a delay in the turnaround in the economy Expansionary Fiscal Policy is the policy designed to stimulate the economy during recessive periods; in which there is an increase in government purchases (spending), a decrease in taxes

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