Monetary and Fiscal Policy Macropoland.

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Monetary and Fiscal Policy: Case Study of Macropoland
A recession generally means that there is very little economic activity in a country based on the little circulation for investment. All the activities that the government should conduct should be pegged around increasing the supply of money in the economy. Since the economy is in doldrums, the economic policy that I would prescribe to the president would include a blend of the expansionary fiscal policy and expansionary monetary policy required to raise the overall level of the aggregate demand in the economy (Cregger 4). In consideration of the role played by the government in the situation, increasing government spending is an expansionary fiscal policy of interest while at the same time decreasing the rates of taxation in the economy. This will stimulate consumption levels and increase the equilibrium national income. This, in turn, will also raise production and reduce unemployment as the firms will hire more workers to produce output. The overall price level will rise on the economy due to the rise in aggregate demand.
On the other hand, the central bank should lower interest rate through the open market purchase of the government securities. This will increase the money supply in the economy and lower the rate of interest. The reduced interest rate along with rising aggregate demand as mentioned above will lead to a rise in investment as the business sentiment will …