For the analysis and comparison of the macroeconomic policies of Democrats and Republicans, it is important to assess the impacts of such policies on employment, inflation and economic growth. …
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The fiscal policies and monetary policies of the Federal Reserve should be compatible with the fiscal measures to achieve the intended objectives of the government since Federal Reserve regulates interest rates and supply of money for achieving the same results. This paper seeks to study the economic policies of Democrats and Republicans and their impact on economic development. Political ideology and economic policies According to 2012 Republican Platform (1) “Excessive taxation and regulation impede economic development. Lowering taxes promotes substantial economic growth and reducing regulation encourages business formation and job creation.” Republicans believe in taxing only for the government’s essential functions. The republicans favor fiscal responsibility and an end to deficit spending. “Government spending and regulation must be reined in (Ibid, 1)...federal programs must contribute to the deficit reduction necessary to put our country back on a sound fiscal footing … (Ibid, 17). ...
of an opportunity society.” Therefore, inter alia the parties’ policies on these two aspects, taxation and public spending, are fundamental factors in macroeconomic analysis. Real GDP Economic analysis using Real GDP is more reliable since GDP is adjusted for inflation and reflects the economic picture in constant dollar terms which makes comparisons meaningful. In the USA “Real GDP increased at an annual rate of 2.5 percent in the first quarter of 2013” (Trading Economics) compared to 0.4 per cent in previous i.e. the fourth quarter of 2012 (Exhibit 1). The recession during 2007-2009 was very severe in American history. “Congress and the Bush Administration enacted the Economic Stimulus Act of 2008 (P.L. 110-185). This act was a $120 billion package that provided tax rebates to households and accelerated depreciation rules for business” (Elwell, 3). The stimulus package had a positive effect on economy resulting in recovery of economy and reflected in real GDP from the later part of 2009. Exhibit 1 Federal Reserve Federal Reserve exercises control over monetary system through regulation of interest rates and money supply. The fiscal measures taken by the government should be complemented with monetary policies for achieving the economic objectives of a country. Republican National Conventions (4) states “The philosophy and policy of Federal Reserve Inflation diminishes the purchasing power of the dollar at home and abroad and is a hidden tax on the American people. Moreover, the inflation tax is regressive, punishes those who save…” whereas Democrats state “We will raise the minimum wage, and index it to inflation” (2012 Democratic National Platform). When the economy is in downturn, reducing the interest rates and increasing supply of money are
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“Macro Economic Policy: Democrats Vs Republicans Essay”, n.d. https://studentshare.org/macro-microeconomics/1478058-writing-assignment.
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