Essay on President Of Bartvia On The Fiscal Policy

765 Words Apr 21st, 2016 4 Pages
The purpose of this paper is to advise the president of Bartvia on how to enact some expansionary fiscal policy. The economy of Bartvia is close to a full employment level, meaning that all resources are most fully employed in the economy. A short run tradeoff between unemployment is better than inflation.
To begin with “An expansionary policy is a macroeconomic policy that seeks to expand the money supply to encourage economic growth or combat inflation (price increases’. “Inflation is an increase in the overall level of prices in the economy.pg.14” if unemployment decrease that means more people would have jobs, more employed works means more household spending so the GDP of Bartavia will rise. If people are spending more prices of resources will go up causing an inflation. For example, hiring more employees has its pros and cons. The pros of hiring more employees mean more resources would be made at a quicker pace and if you have more employees that means more growth in the gross domestic production because they will be spending more. The cons would be you’ll have to invest more money to into a training program and the employee’s accommodations such as desk, chairs and many other resources. Why I give this as an example of inflation because if you hire a lot of people the prices of the desk or chair may rise because the demand and the supply of this resources will go up, for example of the price of the chair last year was two dollars it went up by fifty cents because…

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