There are numerous people running for President of the United States in 2016 from both the Republican and Democrat political parties. The ten major candidates running for President from both parties include Jeb Bush, Ben Carson, Ted Cruz, Carly Fiorina, John Kasich, Rand Paul, Marco Rubio, Donald Trump, Hillary Clinton, and Bernie Sanders. This paper will look at Donald Trump’s proposed fiscal policy and how his policy will affect the United States economy by looking at the supply side perspective on the aggregate demand-aggregate supply model. Overall, Donald Trump plans to reduce some taxes in order to positively affect the economy of the United States. The details of his proposal are explained below.
Donald Trump is notorious for his immense …show more content…
When combining both changes, it is obvious that the level of real GDP is going to increase. From this increase in real GDP and through looking at figure one below, we can conclude that the price level for all goods and services is going to decrease. Based on the Okun’s Law relationship on the unemployment rate and the level of real GDP, we can also conclude what will happen to the unemployment rate. Since the level of real GDP is increasing, this means that the unemployment rate is going to decrease according to the inverse Okun’s Law …show more content…
Since there is no single answer that will always fix every issue in an economy, there has to be a variety of solutions put in place and these solutions need to be amended as new issues develop. However, the three different perspectives on fiscal policy (classical, Keynesian and supply side perspectives) cover the entire spectrum of solutions that can be put into place to correct issues in the economy. Each of these perspectives have their own goals that will improve the economy in some way. The supply side perspective, which falls under Donald Trump’s ideal plan, looks to lower taxes in order to shift aggregate supply. The Keynesian perspective, which falls under Hillary Clinton’s ideal plan, looks to raise taxes in order to influence spending. The classical perspective looks to allow the markets to adjust to changes without any government assistance. Hopefully, if Donald Trump is elected President of the United States in 2016, his fiscal policy will be enacted and will yield the expected results based on the aggregate demand and supply model and the loanable funds market. If these results occur, hopefully all of us will benefit from his news policies under his
Donald Trump is notorious for his immense …show more content…
When combining both changes, it is obvious that the level of real GDP is going to increase. From this increase in real GDP and through looking at figure one below, we can conclude that the price level for all goods and services is going to decrease. Based on the Okun’s Law relationship on the unemployment rate and the level of real GDP, we can also conclude what will happen to the unemployment rate. Since the level of real GDP is increasing, this means that the unemployment rate is going to decrease according to the inverse Okun’s Law …show more content…
Since there is no single answer that will always fix every issue in an economy, there has to be a variety of solutions put in place and these solutions need to be amended as new issues develop. However, the three different perspectives on fiscal policy (classical, Keynesian and supply side perspectives) cover the entire spectrum of solutions that can be put into place to correct issues in the economy. Each of these perspectives have their own goals that will improve the economy in some way. The supply side perspective, which falls under Donald Trump’s ideal plan, looks to lower taxes in order to shift aggregate supply. The Keynesian perspective, which falls under Hillary Clinton’s ideal plan, looks to raise taxes in order to influence spending. The classical perspective looks to allow the markets to adjust to changes without any government assistance. Hopefully, if Donald Trump is elected President of the United States in 2016, his fiscal policy will be enacted and will yield the expected results based on the aggregate demand and supply model and the loanable funds market. If these results occur, hopefully all of us will benefit from his news policies under his