Discuss how you think the government and should respond to the watercourse state of the economy.
The government can respond to this problem in many ways. First we have got to examine what can finalise the problem. The reason why the housing market is about to crash is because there is a recession in the economy. In a recession, unemployment rises and inflation falls. I now need to state ways in which to go down unemployment and to avoid inflation.
The government needs to detainment unemployment low as if fewer plenty are operative then the economy is supplying fewer. This would then avoid a recession. Also, the government have to pay out welfare payments to passel without jobs, which can result in a recession.
Monetary constitution is a method that could repress unemployment. This involves interest judge. When interest rates are cut, there is a decrease in taxes and it forces people to save less money, as they get not as much interest from the bank so the money that they had save get out be spent.
This will increase the spending of the existence and also increase the profits of companies, which could lead to a decrease in unemployment. However, there is a danger of inflation. The government whitethorn decide to increase interest rates to avoid inflation and could avoid a recession and stop the housing market from crashing. However, this can have an effect on everyone who has borrowed money, as they will have to pay back their loans with more interest. They could then go back into unemployment. Instead of solving the problem, this could make the problem rase worse.
A fiscal policy is another method that could reduce unemployment. This involves spending and tax. Decreasing taxes and increasing the government spending in the economy...If you want to get a full essay, order it on our website: Orderessay
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