Econ 545 Week 6- You Decide Assignment

In order to come out of recession, the policy makers should follow the right mix of

policies. These policies include both the fiscal policy and monetary policy and also the supply

side policies. An economy should take care of all the issues such as recession, rising budget

deficit, rising inflation. According to economic consultant 1, interest rates should be lowered so

that investment increases and hence reduction in unemployment takes place. He is quite right in

his policy recommendation but decrease in interest rates implies increase in money supply.

Increase in money supply in the economy leads to increase in inflation level. So, economy can

come out of recession at the cost of increasing inflation.

I somehow disagree with advisor 2. Although it...