Simulation Overview
The country of Erehwon has just appointed a new president for a new 4-year term. Erehwon is a developing country with economic issues. The population is 30 million and twenty percent of the population is below the poverty level. Agriculture is what Erehwon is all about. The issues facing the economy are the country's infrastructure, government spending, and the need for private enterprise. The new president faces the task of taking this developing country to the next level by improving these issues.
Effects of Changes in Fiscal Policy
The effects of change were decided in three categories. These are government spending on infrastructure, government spending on education programs for low-income students, and change in income tax rates. When deciding what fiscal policy to use, looking at how to fight inflation, and the anticipated recession, the president makes the decision to decrease government spending on infrastructure and government spending on education programs for low-income students while increasing change in income tax rates. According to the Impact of Fiscal Policy, Erehwon's economy will see the most changes with real income and real GDP.
Four Key Points from Reading Assignments
The first important key point is economic growth. Erehwon is a developing country, therefore economic growth is important. Agriculture is very important in Erehwon as it's what contributes to the economy. In order for more growth, the president will need to figure out ways to increase employment, reduce government spending, and improve the country's infrastructure. The second important key point is how to measure the growth. Real Gross Domestic Product (GDP) is what is used by econo ...