Our government’s current policy is looking at the long run for our country’s economic growth. The government could focus on the short run developing technologies and jobs until the economy can grow on its own. Creating jobs in our country and getting people back to work is the path our country needs to be on for a recovery. The more people we can get back to work the less we will be paying in unemployment benefits; with more people working they will have more money to spend increasing consumer confidence. Keeping interest rates down will allow the banking industry to be able to make more loans to businesses in order to grow their businesses, and make more loans to consumers.
Keynesian and Classic Model
In the Keynesian model business can push the economy to grow by developing technologies and creating new products to produce for both other businesses and consumers. The Keynesian model points out the people could be saving their money instead of spending taking us into a recession. Focusing on the short run developing new technologies for consumers and businesses will entice consumers and businesses to spend. In the Classic model it is believed that the economy can correct itself without government interfering. In the Classic model it is believed that people would save their money by investing in stocks bonds and businesses then, this in turn would give people more money to spend. The Keynesian