The traditional Keynesian approach to fiscal policy differs in three ways from that is presented in the Fiscal Policy Chapter in your textbook. 1. It emphasizes the underpinnings of the components of aggregate demand. 2. It assumes that government expenditures are not substitutes for private expenditures and that current taxes are the taxes taken into account by consumers and firms. 3. The traditional Keynesain approach focuses on the short run and so assumes that as a first approximation, the price level is constant (no inflation or deflation of prices). Miller, R.L. (2012). Economics Today, 16ed. Addison-Wesley. p. 295.
In today's economy what fiscal policies would you implement? Right now our economy is in a recession, as a Keynesain Economist, how would you manipulate fiscal policy to improve the economy? Be specific, such as, Cash for Clunkers program.
For this assignment you need to evaluate one idea and how you would implement your stimulus strategy.
If I had the power to implement a stimulus as a Keynesain economist to the economy I would create a program for the mortgage and housing department of our economy. Now with this program that I would implement it would help people clear their mortgage to their old way above market level house and in return receive the option to either receive a settlement in which their mortgage will be lower to the current market value of their home or have the option to opt out and move on to a new house with the current market value. Now the purpose of this program would be simply because of the economy in which we are currently in the real estate industry has take enormous hits with people losing their house left and right due to people not being able to keep up with an overpriced mortgage; all of that has taken millions of dollars out of the economy because people don’t have any extra cash to spend on other things taking away from the aggregate demand. So instead of having