Fiscal and Monetary Policy

Paper Summary:

This paper explains that public relations impacts the federal government and the Federal Reserve chairman in the areas of national fiscal policy, which is used to control the money supply and credit to stabilize the economy. The author points out that the Fed uses three monetary policy tools to influence the availability and cost of money and credit: open market operations, the discount rate, and reserve requirements. The paper stresses that a high unemployment rate usually produces low consumer confidence; but, until consumers are willing to buy more, businesses will not produce more goods and services, thus occasionally requiring the federal government to step in to ameliorate things.

From the Paper:

"Of course, there are tradeoffs that must be made in every economy scenario. Banks will not like the dip in the rates at which they lend money. Nor will the national and international financial community necessarily approve a larger budget deficit. But consumer confidence drives the American economy, ultimately, and a more secure American employee is a more secure and a more spendthrift American consumer. Ultimately, this area must be addressed through the interest rate, and then through increased government spending, before the economy can hope to recover."

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