Fiscal Policy Simulation

Paper Summary:

The paper discusses the three variables that could be used to manipulate a country's economy, namely, the infrastructure spending, educational spending for low-income students and income tax rates. The paper also looks at the key factors of economic growth, gross domestic product (GDP), unemployment rates and inflation. The paper shows how although factors can be manipulated to control the health of the economy, a change in one factor may have a negative impact on another. According to the paper, the fiscal policy of a government is a complex and difficult matter requiring considerable thought and careful planning.

Outline:
Effects of Changes
Key Points
Workplace Application
Growing Further Results and Conclusion

From the Paper:

"The country of Erehwon has a new president whose term will last for four years. Erehwon is a developing country that experiences several economic issues; some of which include infrastructure, government spending, and a lack of private enterprise. With a population of 30 million, around 20% of the populace is below the poverty level. Agriculture is virtually the only sector that Erehwon has going for it. This is the situation presented for the fiscal policy simulation. During this simulation, varying factors of fiscal policy were manipulated in an attempt to create a balance with regard to Erehwon's economic situation; a feat that is much easier in this simulation than in real life."

Sample of Sources Used:

• Colander, D.C. (2004). Economics. New York: McGraw-Hill/Irwin.
• University of Phoenix (2008). Evaluating Fiscal Policy Alternatives. Retrieved April 3, 2008 from: https://mycampus.phoenix.edu/secure/resource/vendors/tata/UBAMsims/economics1/economicx1_fiscal_policy_alternatives_simulation.html

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