Poverty and the US Economy Essay

Today, thither atomic number 18 developed, emerging and evolution countries in the world. A larger percentage of multitude live under(a) extreme pauperisation in roughly maturation countries. In most developed countries indigence exist, but a trim down proportion. Most developing countries formulate policies either monetary or monetary to curtail the prevalence of destitution. However, there is no country without a constitution options for elimi democracy poverty. In a broader sense, poverty buttnot be eradicated, but go off be trim back to a certain level. This is why countries ar pursuing various polices that could military service reduce poverty in their region.Fiscal and monetary policies are the chief(prenominal) tools manipulationd in formulating various strategies, bring throughs that aim to reduce poverty. This issue leads us to poverty issue in the United States of the States. Then, what are the various policies that can be used to eliminate poverty in the country. Should the constitution puffrs make use of monetary or monetary policy? Subsequently, what policy tools depart be used, fiscal or monetary? In this write up there leave be a comprehensive analysis on what policy option that should ordinateed to eliminate poverty in the USA.To begin with, spirit what fiscal and monetary policy entails is necessary. Then, what is fiscal policy? In a simple term, fiscal policy refers to an causal agency by the presidential term to manage, watch and guide the tempo or direction of the economy by development its major tools taxation and its total spend. There are two major tools of fiscal policy, which are taxation and presidency spending. In addition, there could be contractionary or expansionary fiscal policy. Expansionary fiscal policy here authority when there is gain in organisation spending or reduction in taxation.This normally leads to cipher deficit and vice versa. While, monetary policy refers to an effort by t he government to change the pace of the economy by influencing or controlling the coin supply and interest rates. These various policies are chased by government in other to achieve the basic economic objectives of full employment, stability in price level and growth of the economy. However, in the US the fiscal or monetary policies contract to be reenacted in other to reduce or eliminate poverty. In performing this task, divergent things have to be put in their rightful place.Even though, poverty cannot be eliminated from the country yet with a very good fiscal and monetary policies it proportion could be reduce. The reason why I debate poverty cannot be completely eliminated is because of the delegacy economy and nation evolves. From condemnation immemorial, there have been some certain shapees of people in the economy. They set off from upper, middle and lower splites. In any economy, there entrust ever be the lower sept and this comprises of the people living below the poverty line.In addition, there will always be those at the receiving end. Africa can be a very good example of this issue. Therefore, there is way how we would not have poverty in any nation. What can nevertheless be done is to reduce drastically the number. In country want the US, the poverty rate can be reduced to a trivial level if government pursues good monetary and fiscal policies. The government could enact fiscal, monetary policies and both together in the economy to reduce the poverty rate. These would be explained as followsFirstly, we are going to consider the fiscal policy. Since, our important aim is to reduce the level of poverty. The government could pursue both the contractionary or expansionary fiscal policy. However, global financial crises have an overall effect on the nations economy. Moreover, the US government could enact contractionary policy to reduce the level of inflation. Since, the tools of fiscal policy are taxation and government spending. The government should reduce its spending and development the tax of the elite and the upper class in the nation only.When this is done, the government will have more funds, which could be spent on increase the centre demand of the lower class or people living below the poverty line. In a way the real income of the lower class will be attach through this policy, since the funds will be redistribute from the rich to the poor. In a way, there is the effect that fiscal policy has on the nation at large and on the individual as a whole. In as much as our focus relates to individual then, we pursue those action that will be beneficial to the individual rather than the whole nation.In addition, when government pursue budget deficit the economy is receiving less than what its expend. In this case, the government will have to finance this deficit using diametric approaches. They could borrow the populace or sell assets. Sale of asset whitethorn include the sale of bonds and treasury bills in other to offset the deficit. treasury bills and bond are example of government tools use to reduce the coin in circulation. Government sells these to the public in other to remove money in circulation.This money needed will be gotten from the upper class or the rich by increasing their tax. On the other hand, an expansionary fiscal policy could also be enacted. Here, the government should reduce the tax of the lower class and government should augment their spending on economic activities that could increase aggregate demand of this lower class and result in change magnitude productivity. When government takes this action, the real income or the disposable income of this class of people would increase and thereby increasing their purchasing power.Given that, disposable income is the income that is left for spending when tax has been removed from income. In addition, when government increases their spending they pursue budget deficit. Here, they should incur these funds on eco nomic activities that could increase the productivity and aggregate demand of the lower class. When there is increase in government spending, it means that the government is redistributing its asset to its populace. Thereby increasing total productivity in the economy and leading(p) to increase in total income.This increase in total income will trickle down to the lower class and increase their disposable income. In essence, when government pursues the basic economic objective, they will be solving the issue of eliminating poverty indirectly. Therefore, the government could use fiscal policy in lessen the level of poverty in the nation However, the government in pursuing this objective of eliminating poverty can also use monetary policy. They could also use expansionary monetary policy. In a way, contractionary monetary policy will not be effective in achieving this objective.When they wishing to use expansionary policy, the government should influence the interest rate by reduci ng it using its various tools. When this happens, investment will increase leading to increase in productivity that will trickle down to the lower class. Since, increasing productivity more labor effort would be require in achieving this. Then, there will be increase in employment that will trickle down to the lower class. In a way, more people will be employed and this will include the lower class.This land site will increase the real income of the lower class and will modify them live above the poverty line. However, the contractionary monetary policy will not be effective in this case. Since, under this policy there will be reduction in the rate of interest and consequently leading to decrease in productivity. When productivity is reduced, it means inventory is reducing and companies are sacking workers and this most times affects the lower class. Therefore, this will further decline poverty situation in the country and contributing to increase in the level of unemployment.In another way, the government could combine both fiscal and monetary policies in other to achieve their objective of eliminating poverty in the country. What is needed is the right combination in other to guide against inflation. The government could influence the interest rate and at the same time enact policy that would make lower income earners pay reduce tax or used to offset the feedback from these policy option. The government could also combine expansionary monetary and fiscal contractionary policies in a way to offset any feedback from this policy options.In conclusion, there are ways the government of the United States of America could use to eliminate poverty. However, we should have it in mind that poverty cannot be eliminated permanently in the country. It could only be reduce to its barest minimum. In a way, the government actions are very vital. The two main policies to be enacted are the monetary and the fiscal policy. Finally, I think the global financial crises have a way of influencing the way these policies will work.