Eco360 Week 3 Fiscal Policy

Abstract

The fiscal policy simulation is used for a student to demonstrate his or her critical thinking knowledge in fiscal policy. The student plays the role of the President of Erehwon, and it is his or her job to improve development and encourage a boosting economy to the nation. The bank, however, makes decisions regarding monetary policies.

Introduction

Even though it may not be popular at first with citizens, increase interest rates and government infrastructure to increase employment because inflation rates will decrease and citizens will become educated. As the president of Erehwon, several changes needed to be implemented in order to achieve a more prosperous economy. Inflation has become a key factor in the country of Erehwon because it decreases the value of their currency against other countries. Literacy is another problem in Erehwon, with only 35% of females being able to read and write. These problems present themselves in the unemployment division. Many factory positions are being lost, however, agriculture remains steady. The decisions to increase or decrease interest rates, infrastructure and on education programs for low-income students are some of the decisions that allowed myself to be re-elected for president of Erehwon.

Changes to Fiscal Policy

Fiscal policy is defined as, "measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. The country of Erehwon has a decreasing workforce, and unemployment is rising. In the year 2xx6, I changed the government spending by 400 million dollars. Another 100 million dollars was put towards programs to educate low-income citizens of Erehwon. One key factor that decreased inflation was an increase of 1% for interest rates. This decreased inflation from 6.88% to 5.38%. These measures increased real Gross Domestic Product to $41.36 billion dollars of the country of Erehwon. These changes help lead the country to get out of recession and to lead towards a more prosperous economy.

Applying to Current Workplace

The fiscal policy simulation allowed me to demonstrate my understanding and skills critically to think on ways to decrease the level of inflation and unemployment. The advice that I received from Maria Alvarez and Frank Smith in the simulation, allowed me to review the aggregate demand and to choose the most popular decision to increase or decrease on government spending and taxation. At work, I am inspiring to become