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Sound Economic Policy Paper

1781 Words8 Pages

A sound economic policy is usually the foundation of a strong government and a path to strong economic development. I will be discussing different aims and tools policymakers may use to form a strong economic policy. I will briefly discuss the aims that these policymakers will seek for development, such as, inflation, economic growth and unemployment. In addition I will analyze different tools policymakers may use, such as, interest rates, taxes and government spending. After, these analysis’ I will suggest a guide I would use, with examples, to develop a prosperous economic policy.

Firstly, I would like to separate two different policy categories. Many governments now use a policy called discretionary policy, which is used to change fiscal and monetary policy to target inflation, economic …show more content…

For example, ‘The state of Delaware in the United States has one of the lowest corporate taxes in the United States and has become home to many large corporations located around the world. Delaware currently has a corporate tax rate of 18.5% compared to the United States national average of 35%. It now has over 285,000 business incorporations, one of the largest rates in the world’ (Berman, 2015). This leads me to conclude that a successful economic policy would incorporate a low tax rate to help lure businesses into investing in your country. I believe this would help lead to economic growth, lower unemployment and a lower inflation rate. Firstly, this tool would help eliminate unemployment by increasing new employment within a country by bringing in new companies. Secondly, this new job growth would in turn lead to higher economic output, due to more new employees being added to the country. Thirdly, these two factors would definitely help minimize the risk of an out of control inflation rate, due to new income and advancement of the

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