Ferguson Corporation Case Study

1. We are advisors to the president. The nation is experiencing the following:

a) It has a high unemployment which stems from an insufficient use of resources.

The issue of unemployment is a big challenge in the world because it affects both the developing, underdeveloped and developed nations. One of the reasons why there is high unemployment is because of the nation’s resources are not comprehensively utilized. To solve the issue of high unemployment level, we offer some policy recommendation. The first strategy is the demand side policies which are aimed at reducing unemployment that results from recession hence decreasing demand –deficient unemployment. The second strategy is the supply side policies that are meant to solve the cases
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The president should introduce the lower wages policy that will lead to a reduction in production costs as well as improvement of competitiveness. On the other hand, the government should introduce the policy of protectionism that will increase tariffs on imports or imposing of quotas.

c) It has a capital account surplus.

When a country has a capital account surplus is much better that the current account deficit. We recommend to the president that the best way of solving a capital account surplus is by balancing it with a current account deficit. Since the capital account surplus is caused by the government importing more that its exports. Therefore, we recommend that the should put policies that enhance the country’s exports and ensure that the dollar is not strengthened hence hindering exports.

d) The technology level is high

When the technology of a country is high, there are both positive and negative impacts that are associated with it. Therefore, the president should implement policies that control technology to minimize the negative impacts on the society. The government should control how people use the internet to reduce cases of cyber-crimes and cases of health
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This can be achieved by balancing the money that is leaving and entering the country. Encouraging domestic investments will be a good way to address the issue of capital; account deficits.

Elucidate on structural deficit reasons.

The structural deficit is caused by poor economy of a country. When there is a major imbalance in the federal and state governments expenditure and receipts it leads to a structural deficit. Therefore, this deficit makes a government keep borrowing, and this may lead to large debts. When a country spends more that they can raise there will be a deficit despite the fact that the economy is well or bad. This will make the structural deficit grow at a higher rate as compared to the economy of the country.

What are the right policies to combat structural deficits?

Structural deficits can be combated if the right policies are put in place. One of the policies is for a country to cut down its spending. Cutting spending will be important creating a budget that is manageable. Another policy that can help to reduce the structural deficit is raising more revenues, and this can be achieved by increasing the tax. This will raise more money that can be used in the budget as well as paying the

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