Marketing Case

Mr. President,

The U.S. economy has fallen into a recession. It is a severe and deep recession, and one that some economic analysts say may persist for at least another year. The unemployment rate has risen to levels not seen in over 20 years. The current unemployment rate is at 8% and is expected to rise further. The inflation rate is -2.4 percent, meaning that overall, prices are falling.

Monetary policies are maintained by the Federal Reserve and fiscal policy decisions are made by yourself and Congress. It is essential and beneficial for the economy for yourself and congress to use government spending and taxation to influence the economy and stimulate an economic upturn. "When recession sets in, governments can increase spending or reduce taxes to stimulate a recovery; therefore, it is the nonpolitical Federal Reserve that has essentially been assigned responsibility for keeping the economy on a trajectory of solid growth, high employment, and stable prices" (Stone 562).

After conducting a thorough analysis and extensive research I have come to the following conclusions regarding economic recovery in The United States:

Kathy Lee, Former Economic Advisor to the President stated, "I think the President should consider raising taxes and reducing government spending; this will help correct the budget deficit problem and help the economy get rolling again". I absolutely disagree with this recommendation and I have aligned myself with Ms.Tanney, I recommend the opposite: decrease taxes and increase government spending. Allison Tanney, Economic Consultant, also stated. "As I see it, we need both expansionary fiscal policy and expansionary monetary policy. As far as monetary policy is concerned, the Federal Reserve Board needs to increase the money supply by buying bonds, raising interest rates, and if necessary, raising the reserve requirement." This will create more consumer spending and "consumer spending is a key component to explaining how the economy reaches short-term equilibrium employment, output, and income" (Stone 474).

It is my recommendation that you decrease taxes and increase government spending to increase consumption which will in turn increase income. A small amount of government spending can create more consumers spending and have a great influence on the economy. Using a Money Multiplier we can accurately predict how much a small amount of government spending will generate in the economy.

Government spending will create new jobs and the government's consumption of services from various industries will create a ripple of money and jobs throughout the economy.

I am also recommending a decrease in taxes that will create more disposable income allowing individuals and corporations to increase their consumption. Increased consumption will cause an increase in jobs, and