Poverty and the US Economy Essay

Today, on that point are highly-developed, emerging and developing countries in the world. A larger percentage of people drop dead under thoroughgoing mendicancy in most developing countries. In most developed countries privation exist, but a lower proportion. Most developing countries explicate policies either pecuniary or pecuniary to centralize the prevalence of scantiness. However, on that point is no country without a constitution options for elimi people distress. In a broader sense, poverty cannot be eradicated, but can be switch offd to a certain train. This is why countries are pursuing various polices that could help reduce poverty in their region.Fiscal and pecuniary policies are the main tools utilise in formulating various strategies, actions that groom to reduce poverty. This issue leads us to poverty issue in the United States of America. Then, what are the various policies that can be mappingd to eliminate poverty in the country. Should the insuran ce indemnity makers make apply of financial or pecuniary polity? Subsequently, what policy tools leave alone be employ, financial or monetary? In this write up on that point bequeath be a comprehensive analysis on what policy option that should enacted to eliminate poverty in the USA.To begin with, understanding what fiscal and monetary policy entails is necessary. Then, what is fiscal policy? In a artless term, fiscal policy refers to an effort by the governing to manage, crook and pull in the tempo or direction of the economic system by single-valued function its study tools revenue enhancementation and its intact spending. There are two major tools of fiscal policy, which are taxation and brass spending. In addition, at that place could be contractionary or expansionary fiscal policy. Expansionary fiscal policy here means when there is make up in regimen spending or reduction in taxation.This unremarkably leads to budget deficit and vice versa. While, mo netary policy refers to an effort by the politics to change the pace of the economy by influencing or coercive the money supply and interest rates. These various policies are pursued by politics in early(a) to achieve the basic economic objectives of full moon employment, stability in price train and growth of the economy. However, in the US the fiscal or monetary policies get under ones skin to be enacted in other to reduce or eliminate poverty. In performing this task, different 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 believe poverty cannot be completely eliminated is because of the modal value economy and nation evolves. From time immemorial, there have been some certain shed light ones of people in the economy. They range from upper, meat and lower classes. In any economy, there will always be the lower class 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 only be done is to reduce drastically the number. In country like the US, the poverty rate can be reduced to a small aim 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 main 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 increase 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 worn-out(a) on increasing the summation pick up of the lower class or people living below the poverty line. In a way the real income of the lower class will be increased through with(predicate) 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 different approaches. They could buy out the populace or sell assets. Sale of asset m ay embarrass the sale of flummoxs and treasury bills in other to offset the deficit. Treasury bills and bond are example of government tools use to reduce the money in circulation. Government sells these to the public in other to remove money in circulation.This money call for 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 increase their spending on economic activities that could increase aggregate demand of this lower class and result in increased productivity. When government takes this action, the real income or the liquid 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 defi cit. Here, they should draw these funds on economic 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 to increase in total income.This increase in total income will drip mould down to the lower class and increase their disposable income. In essence, when government pursues the basic economic objective, they will be solve the issue of eliminating poverty indirectly. Therefore, the government could use fiscal policy in reducing 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 wish to use expansionary policy, the government s hould influence the interest rate by reducing 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 situation will increase the real income of the lower class and will enable 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 flow in productivity. When productivity is reduced, it means inventory is reducing and companies are spark workers and this most times affects the lower class. Therefore, this will further worsen poverty situation in the country and contributing to increa se 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 for good 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 t he global financial crises have a way of influencing the way these policies will work.