Congratulations—you have just been hired to be an economic adviser to be Preside

Congratulations—you have just been hired to be an economic adviser to be President of the United States! As you know, being the “leader of the free world” entails a lot of responsibility for affairs domestically and internationally—your boss is the face and executive of the US federal government. Though the US is a mostly market-based economy, the government spending and tax decisions Congress votes on and the President signs into law do have somewhat of an impact on the US economy. In their first year as President, the President and Congress are faced with some difficult decisions pertaining to expenditures and taxes.
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After consulting with Congressional leaders from both parties and consulting with high-ranking members in the administration, the President is faced with two budget policy options:
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Option 1—Expansionary Fiscal Policy
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Increase federal government spending by $300 billion for infrastructure. Taxes are not raised.
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Option 2—Restrictive Fiscal Policy
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No increase in government spending. Increase taxes on businesses and individuals: will raise annual federal income tax revenues by 10% or about $300 billion.
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To give context to these policy proposals, the day you take office, the US economy looks like this:
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Natural Rate of Unemployment: 5.3%
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Actual Unemployment Rate (most recent month): 6%
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Nominal GDP: $22 trillion
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National Debt: $26 trillion
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Real GDP growth (last 12 months): 3%
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Current Annual Budget Surplus/Deficit: $1.5 trillion deficit
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Historical Annual Inflation Rate: 3.2%
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Inflation Rate (most recent 12 months): 6.5%
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Your Assignment:
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Write a short paper about this policy problem and state which fiscal policy you would ultimately propose to the country and to Congress. In the paper, be sure to:
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Explain the pros and cons of each policy
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Explain why you chose the policy you did (Policy 1 or Policy 2) and why the other policy is inferior
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Relate your analysis and justification of the selected policy option to concepts studied in Chapters 33 (AD-AS) and 34 (Fiscal Policy, Monetary Policy, and AD-AS)
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Provide examples, hypothetical or from the real-world, to flesh-out your argument
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No citation needed in this paper since you are use your knowledge of the AD-AS model (Chs. 33 and 34) and your own economic opinions to complete this entry.
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Some Rubric (2)
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Some Rubric (2)
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Criteria Ratings Pts
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This criterion is linked to a Learning OutcomeDescription of criterion
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5 pts
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Full Marks
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0 pts
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No Marks
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5 pts
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This criterion is linked to a Learning OutcomeA. Logically Evaluate Information
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4pts – The student has logically and accurately evaluated and explained the assignment specifications, with no errors. 3pts – The student has logically evaluated and explained the assignment specifications, with few errors, demonstrating evaluative competency. 2pts – The student attempted to logically evaluate the assignment specifications, yet it insufficient in demonstrating evaluative competency. 1pt – The student has not logically shown or evaluated accurately the assignment specifications.
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threshold: 3.0 pts
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4 pts
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Exceeds Expectations
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3 pts
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Meets Expectations
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2 pts
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Needs Improvement
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1 pts
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Inadequate
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4 pts
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This criterion is linked to a Learning OutcomeB. Logically Analyze Information
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4pts – The student has logically and accurately analyzed and explained the assignment specifications, with no errors. 3pts – The student has logically analyzed and explained the assignment specifications, with few errors, demonstrating evaluative competency. 2pts – The student attempted to logically analyze the assignment specifications, but made a few mistakes. 1pt – The student has not logically analyzed accurately the assignment specifications.
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threshold: 3.0 pts
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4 pts
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Exceeds Expectations
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3 pts
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Meets Expectations
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2 pts
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Needs Improvement
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1 pts
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Inadequate
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4 pts
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This criterion is linked to a Learning OutcomeC. Logically Synthesize Information
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4pts – The student has logically and accurately synthesized and explained the assignment specifications, with no errors. 3pts – The student has logically synthesized and explained the assignment specifications, with few errors, demonstrating evaluative competency. 2pts – The student attempted to logically synthesize the assignment specifications, but made a few mistakes. 1pt – The student has not logically synthesized accurately the assignment specifications.
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threshold: 3.0 pts
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4 pts
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Exceeds Expectations
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3 pts
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Meets Expectations
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2 pts
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Needs Improvement
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1 pts
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Inadequate
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4 pts
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Total Points: 17
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