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Essay / Research Paper Abstract
A 3 page paper that begins with a short definition of each theory. The paper goes on to explain how the package incorporates both types of policies with far more on the Keynesian side than the monetarist side. Bibliography lists 4 sources.
Page Count:
3 pages (~225 words per page)
File: MM12_PGstmk9.rtf
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Unformatted sample text from the term paper:
the supply of money to achieve stable prices. Changing the money supply would include increasing or decreasing the money supply. Given those definitions, Obamas stimulus package incorporates both economic theories.
The stimulus package includes massive spending by the government which reflects Keynesian economics theory. It also includes reducing interest rates on loans and credit which changes the money supply.
The tax credits adhere to the monetarist theory because it will allegedly give persons who earn less than $250,000 per year an additional $13.00 in their weekly paycheck. It is
hoped that people will spend the money, thus, increasing the economy. Given the economic devastation, this may not happen. People may just save it or use it to pay off
bills rather than spending more money. Government investing in improving the infrastructure is a Keynesian policy. This could feasibly put a million or more people back to work. The
same is true for government investments in alternative energies. On the other hand, businesses who make capital investments will be able to depreciate the new buildings, equipment, etc. faster, which
will lower their taxes (Bendavid, Williamson and Reddy, 2009). The package doubles the amount small businesses may now write off these same types of capital investments (Bendavid, Williamson and Reddy,
2009). Tax cuts, including a reduction in payroll taxes is a monetarist policy that gets money most quickly to taxpayers (Bendavid, Williamson and Reddy, 2009). As already noted, whether
or not people will spend it is an unknown. There may be enough people who do spend it that this policy will get more money flowing (Bendavid, Williamson and Reddy,
2009). Analysts expect little or no change as a result of this package in the near future, in fact, they suggest the economy could get worse in 2009.
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